I stopped reading when you said the Vita was too expensive.
You do realise its specs blow away any iPhone right? Thats on top of the 5inch OLED screen. And comes at less than half the cost of the lowest model iPhone 4S.
£200 is a bargain. And you cant complain about memory either, as it was effectively free for those who preordered.
You also need to remember that touchscreen devices have no physical controls, which means its not a gaming device. Most Indie XBLA titles are more advanced, because they have physical controls.
All Apple needs to do is create a slim case with a gamepad integrated with dual analogue sticks, or slide pads, if you will. Then once all the big companies start to make AAA titles for iOS (which they have yet to do), then, and only then, will smartphones be the go-to device for portable gaming.
You're comparing them as purely gaming devices, which is something nobody is going to do. You wouldn't buy an iPhone and only use it as a games machine any more than you'd buy a vita as a phone. If you think the iPhone is bad value as a games machine, the vita is an absolute outrage as a phone
This is the whole issue - you need a phone, and you likely want all the extras that go with it like camera, email, browser, and all the apps. That means you already have something in your pocket like an iPhone. So when it comes to a games machine, you already have the iPhone, while the vita is an additional purchase, and an extra box to carry. If you buy only the vita it's cheaper, but you still have to buy that iPhone.