At Amazon.com, a Nintendo DS lists for about $130 while the iPod Touch starts about $290. That would seem to swing the argument in favor of the DS, but DS games are expensive, ranging from $20 to $35.
The situation is similar for the Sony PSP, which lists for about $170 on Amazon and features games ranging from $20 to $40 (excluding higher priced imports from Japan).
Games for the iPhone/iPod Touch range from free to $10. And the ones I've tried on my iPhone are a lot of fun.
While more expensive games may yet appear, game publishers have been quite reasonable so far. Whatever the reason, iPhone/iPod Touch games are very attractively priced. If you plan to get more than six games, the iPhone/iPod Touch starts looking like a better long-term deal.
While the DS and PSP are both good gaming machines, neither can match the iPhone/iPod Touch as a media player or portable Web browsing device.
And the iPhone/iPod Touch's form factor makes it much more appealing when on the go; it passes the pants pocket test. The PSP is just a bit too large.
Perhaps more to the point, having one portable device that can do everything is just easier to deal with.
The DS and the PSP still have a wider variety of game titles, but Spore is coming to the iPhone/iPod Touch and other A-List titles can be expected.
Nintendo and Sony had better get their responses to market before Apple and its expanding iTunes ecosystem conquer the world.