It won't even touch DS sales.
For every good iPhone/iPad game, there are literally a thousand bad ones. A larger touchscreen is not going to make any virtual joysticks better. The larger weight and size means you're not going to feel like throwing it around as much, meaning less accelerometer action.
In addition, for the price, and the lack of real portability (pocketability), it's going to be mostly relegated to home use. Which, if I'm going to be at home, I think I'll stick to my consoles which cost less, have better controls, and much more excellent games. Or play my PC with perfect controls and awesome multiplayer action.
Both Engadget and Ars had VERY good articles featuring thoughts from most of their editors on it, and made a lot of good points. Apple was successful at making a product that sits between laptop and phone. Unfortunately, no one is convinced that we need such a thing. In order for the iPad to have been truly a success, for it to really excite people, it needed to at least make irrelevant one of those devices. It did no such thing. Instead Apple is trying to convince us that we need a whole new category in ADDITION to our existing ones.
Also, Detty, what's your point with DVDs? You're going to have to rip every DVD and encode it in mp4 h264 in order to even watch it in the first place. I'd rather take my ZuneHD along which I know has a better looking screen and still can output 720p.
Also, Martyn: you never listen to Pandora while working? Cause you can't on the iPad/iPhone.