while i agree with a lot of your points, such as Nintendo needs to stop over simplifying, you cannot compare an $800 ultra-portable tablet laptop to a $170 handheld game machine, in almost any important way. That'd be like me saying, yeah I don't really like my iPhone because my Macbook Pro can do SO much more.
Not that $250 and $170 are a big difference, but it started more expensive and HAD to be adjusted down to try and Stimulate sales.
Normally I would agree with you on the comparison and it is not valid for kids/teens/college folks, but IMO, those that grew up playing Nintendo and now have careers and entertainment (disposable) income and are looking for portable gaming outlets would be looking at either a Nintendo or Sony handheld, or an iPhone/iPod Touch/iPad.
iPhones and iPod touch devices are not that far from Nintendo's 3DS original price point.
The baseline iPad 2 is not much further from what Sony has charged in the past for their devices.
If anything, Apple has a decided advantage when you factor how they've scaled their offering to work on a wider variety of devices, at a wider range of price points.
Add to the fact that I can buy ONE copy (at a lower price point per game which should be factored for a true long term cost analysis) and play on multiple (different) devices, and the iOS/Apple model is all the more appealing.
It wasn't that long ago that you either paid $60 per console game or $25-$40 per handheld game.
The fact that you can pick up high production value games for free to $10 is being lost on many and a major shift in consumer pricing which benefits us all.
Competition is good for everyone...we'd be paying $100 per game if Nintendo/Sony/Microsoft were still dictating the market.