Can the iPhone compete in the mobile game market?

Yesterday two well known game companies, Sega and EA, showed off two demo games that were built in two weeks and I have to say it look pretty impressive. The graphics where top notch and I have even heard that the iPhone has better specs than that of the PSP, so my question is can Apple compete in this market? There are a lot of things going for it, first off its an iPod so it has plenty of users plus with the SDK just released just about any company will be able to make and sell their games without any issues of making a physical copy of their game because of the App store. Then on the other side there are plenty of negatives about the platform. First off there are no buttons on the device so more “hardcore” games probably will not be released and there is limited size space on the device and there is no other medium to store the game on like with the DS and PSP.

More than likely the games will be for more casual but it should be interesting to see how this all plays out.