Someone want to point out this hidden market? It's price point? It's feature demand from the users?
Just how is it hidden? Casual games on PC VASTLY outnumber "real games" on PC, and web-based games have gotten to be immensely fun timewasters, and they primarily all free, or trying to figure out how to build a web environment to draw in some add revenue.
The hidden market isn't hidden. The price point is already sitting there as "low enough to be an impulse buy," and the demand is less "demand" and more "spending a little more time getting enough for people to notice it's there."
Since the SDK isn't out yet, they don't have people building more interesting efforts for the iPhone and iPod Touch, but there are already options for the other game-enabled iPods, and it's trivially easy to distribute through iTunes (which I hear has one or two users), so we may expect a bigger push when they have a few more ducks in a row.
How would that be a bad thing, a difficult thing, or a "hidden" thing? It would require relatively little effort to make it even just a "much more well known" thing, but they don't have a lot out there yet to brag about, so we're not going to see a commercial yet.
They're certainly not going to follow a DS or PSP model, nor are they going to build hardware to compete in those arenas... they'll just attach casual gaming to the iPodosphere (Mac/PC and AppleTV too, if they can manage it) and see where it goes.
I can only see them trying their hands if the get a HUGE amount of pressure from consumers to move more in the "serious gaming" direction. But considering I spend almost more time playing flash games (especially good tower defense ones) than any OTHER games... I don't think they'll feel much pressure to deliver what's already out there, rather than stretch out in their own direction.