They don't need to use the iphone. The itouch and the ipad are enough. The real issue is that apple's products are so common, people are pretty comfortable buying apps for them, and are more likely to have an IOS compatible product around with them due to the fact that they need it as a phone and for the many other things it can do ... in addition to play games. Don't underestimate people's need for simplicity (or people's inertia). I don't see the market going away per say, I just see a big player coming in and splitting up the pie in an unfavorable way.
Uhh no... iphone is filled with crappy games, and there is barely any real income to be made by developers. You have through a sea of crap and sell your work for less than a dollar.
This won't help the gaming industry at all, nor does it help entertain the public. Why do you think angry birds became so popular? Compared to a standard DS game, it's relatively crap, but for an iPhone game it's half decent.
Besides, the only platform you can play Nintendo first party titles is well on Nintendo platforms.
I don't believe smartphone gaming will steal market share in any significant way.
The biggest competitor to gaming on phones is social networking. People rather chat with their friends than play games on their spare time while using their phones.
I think Angry Birds has popularity has peaked. After launching the game in all smartphones, I bet they will try to port it to consoles which will fail miserably. Then they will make Angry Birds 2 but will be delayed for so long that no one will care anymore.