In a perfect world, I would actually prefer that third parties recognise DS as a non-core-gaming console and either aid it (and Nintendo) in pursuit of the kinds of 'new' gamers we're talking about here or move onto PSP. To be honest I think that would provide a much more legitimate purpose for DS and probably improve the PSP line up. And it would also help, one would hope, in forcing Nintendo's hand: both making them take PSP and it's prowess more seriously, and expediating production of a new Gameboy.
However, I think the situation has become interesting, at least in Japan. It almost seems alien that DS has been holding its own against PSP. We're seeing good traditional-style franchises and gaming experiences go to DS, sometimes with novel use of the DS features, but equally often (or moreso) as nothing but an after-thought. The GBA ports are a horrific example of exploiting the DS as a means to sell what might otherwise be sold on a GBA or upgraded for PSP. It's not what Nintendo have been doing themselves (outside of Mario 64 which doesn't benefit much from being on DS) so I think it's safe to assume this is a clash with their initial intentions.
I personally think it's looking increasingly likely that there is potential for DS to remain a home to core gaming as well as this new touch-sensitive niche of accessible gaming Nintendo are trying to discover. I think it can be a cheaper PSP alternative AND the console for people who frit their time away playing online chess / flash games.
I do not think this would have been possible but for several factors.
For Joe Public:
There is a gulf in price between DS and PSP. It's certainly an assumption, but I can see DS price dropping before PSP too and at a greater frequency if necessary.
The DS has had the jump on PSP all over the world and gotten itself a neat userbase lead.
To a window shopping gamer, it may well seem novel / new / interesting.
And for a gamer more in the know, such as your average Gaffer:
They may already be Nintendo fans. Instant interest.
Some people see potential for new kinds of games, or new spins on old gameplay - and this appeals to them
Some see it specialising in different gameplay types / genres than other hardware - and it is these that make DS appeal to them.
Nintendo games, and some others, are getting media/board attention both positive and negative. It's all publicity. This place thrives on news, reviews, rumors and PR. What if the media had ignored it like they do with Gamecube more and more?
The promise of further Nintendo games and third party titles
An online plan people thought would never come.
If Sony had eaten a little more into the bank they could have mortally wounded DS and have released a "we now dominate handhelds" PR piece within a matter of months. As it stands they were slow producing and shipping initial units, they've been slow following DS around the world, and they've been doing it asking for more money than Nintendo.
I think at E3 there will be more software that legitimises the DS as a choice for people who aren't gamers such as those here in this thread right now. New games that benefit from pointer devices. Applications even. Peripherals for both. If Nintendo don't foray into Instant Messenging as part of their online plan, then surely somebody else will. But equally, I think they're going to retain the kind of third party support that generates the likes of The Sims, Madagascar, Robots, Revenge of the Sith, Rayman 2... cash ins born of the home console world, carried over from films or carried over from the world of the Gameboy and Mobile phones. Stuff on the release list - like Madden, FIFA, Winning Eleven, GoldenEye Rogue Agent, Splinter Cell. If mobile phones are getting it, I think DS will too. Maybe the familiar Arm architecture is what is bringing the likes of Gameloft aboard.
I believe that DS is turning into the lower tier of ALL handheld gaming as opposed to the sole provider of niche accessibility gaming. The GBA could have been an even lower tier were they not so obviously getting ready to phase it out.
If the recent Nintendo curse fails to strike as it has for N64 and Gamecube, whereby eventually only Nintendo benefit from their hardware, then I think it will be some small unintentional victory against Sony, which down the line proves not so much small but grand in the scheme of things. DS could potentially stand Gameboy in good stead (if it is in fact coming). This underpowered DS has the potential to cause more upset than an underpowered Gameboy would have.