When the App store started there were discussions here and elsewhere about it. When it came to games everyone talked about $2,99 $3,99 or something.
How much does it cost to develop a game like GOW? How much does it cost when you buy it? $3,99 hhmmm?
While iPod touch outperforms Nintendo DS in every way (remember, it has 4 MB RAM and 66 MHz!) and much better games should be possible on the iPod touch easily, the games are expected to be sold for 1/10 of the price of a DS game.
It is possible to make great games for iPod touch, but in such a "cheap, cheap, cheap" situation we are not able to start a year+ project on that platform, and I think many others are not able or not willing to take that risk, too.
Christian