At first I thought-
Could be true. I doubt the iPhone would cannibalise DS sales (check the NDP, it owns the world). They wouldn't release DS games or out like that, probably classic games.
But then-
Nintendo has the Virtual Console to cater for that. So I can't see it happening at all now. Their bases are covered already.
Also on screen gamepads are horrendous. I had a NES one on my Pocket PC and it just didn't work at all.
What I can see is EA developing some games for the iPhone. Unfortunately.
Well that's their own fault and they're missing out