Apple's iPod Touch a serious gaming contender?

This article from TUAW suggests that the iPod Touch, and possibly subsequent cheaper versions, have the earmarks of a potential hand-held gaming console revolution.
From Michael Pachter:

Apple's main handheld gaming device is $200 this Christmas, but he says next year it'll be $149, and the year after that, maybe $129. When, in the future, you can put down $99 and walk away with an iPod touch, says Pachter, then "every nine year old kid is going to have one of those instead of a DS or a PSP, and if you train kids that this is the game that you want to play... How about Tetris? Why would you pay USD 20 for Tetris when you can get it for USD 6.99 or USD 3.99 on iPod touch?"

Makes sense..