Since we got iPhones, and eventually an iPad, the real loser in my household has been the Nintendo DS, which went from being the usual way to wind down before sleep or to kill a little time on a lazy saturday afternoon, to being basically a paper weight.
Angry Birds and the like are just as compelling, well suited to short play times, offer about the same portability on similar or bigger screens, and way way cheaper. Even if you choose to ignore the many quality and totally free games on the App Store, you can still purchase 10-30 decent games for the price of a decent DS game. And all of this on a device that's significantly useful for a number of things besides gaming.
I still think there's plenty of space in the market for dedicated gaming machines, but that space is tethered to a big TV. I think smartphones are going to all but own the mobile gaming market in a few years.