I think this platform will become substantial for gaming mainly because of the iPod Touch. Tons of kids want one of these, as evidenced by their parents talking about it where I work. They can't talk their parents into an expensive iPhone cell contract, but several parents are giving in and purchasing a touch.
And then once a lot of these kids have a touch as their iPod, the games will naturally follow, especially if they're reasonably priced and not seen as crappy games.