Neither actually, there are games that work on both old and new, and offer improved experience on the newer hardware. Asphalt 6 for example, I have it and it works fine on my old iPad 1 launch model, but it looks and runs best on the iPhone 4s. Some more details on that:
iPhone 4s version
So that game has three levels of graphics right now. Baseline would be running at 480x320 on an iPhone 3gs. The next step up is on iPad or on an iPhone 4 which gets you higher resolution. The third step up is iPhone 4s which gives the extra improvements shown in the article above. I think Dungeon Hunter 2 is the same, and there are others. iOS games still have relatively small budgets, that's the only reason we aren't seeing more and more of this. But they will come as the platform grows, and once Win8 tablets come out you will see it even more.
I love how you call your iPad 1 launch model old... it's been on the market for 18 months. I have an gen 1 ipod touch (4 years old), it runs pretty much nothing that's come out in the last 2 years aside from flashlight apps (ok not even those as most of the new ones are based on the LED) and tip calculators.
If they are going to regularly upgrade hardware, you have to upgrade or get left behind. You're left with games looking like shit in a few years or not running at all. And adding upgrades to a 0.99 game is a whole different thing from doing it for something with a $10+ million dollar budget.
And call me when apple (or any tablet manufacturer) starts shipping ipads with a proper controller in the box (and a TV connector), because until that happens you're not going to get any proper support for a serious game.
rpg.314 said:Consoles sell 50M in 5 years. iPhone sells 100M/yr and still growing exponentially. What is going to attract more AAA efforts? Smaller screens will mean less effort needed into asset creation (May be??? Perhaps a pro artist can help here).
Console buyers spend something like an average of $600 on games in those 5 years, ipod/ipad/phone owners spend something like $25. You tell me what's going to attract higher development budgets.