The 3ds sell and has many lacking, no dual analog sticks, poor resolution and battery life, poor hardware and an overall not tempting software environment. It sells.
I think most of the game successful on the 3ds would map pretty well to a 7" tab.
You think zelda OOT , Mario kart and Mario land 3d would work pretty well on a 7 inch tab? These are 3 of the best selling 3ds games and i'm going to argue that not a single one will be remotely playble on a tablet without some kind of controller which would end up making the tablet basicly a monitor
The main lacking to the Nexus 7 and the upcoming Kindle fire2 is Android it self. It still ain't iOS.
On the other hand if Appel launch an affordable mini iPad... It would be different and indeed way more threatening.
For now to the question "is it the end of handled consoles" I would say no.
IOS still wouldn't cuase a problem.
A tablet is just going to take away the casual gamers from the dedicated devices but there is no reason why something like the 3ds and vita can't sell 10s of millions of devices. There is still a group who want a dedicated gaming experiance.
I think the major problem right now is form factor . The 3ds launch with screens way to small. The xl is about the right size for what it needs and even the vita has a screen to small . It really should have been a clamshell design with a nice long screen on the top .
I also beleive that portable gaming needs to take a shorter life span. The 3ds should have 3/4 years and an out period instead of the 6/7 years of the original DS . This way it will stay with the trends of its time.
2014/5 should have the sucessory for the 3ds and its screen should be at least as big as the screen on 3ds xl .
I also think people are a bit nutty thinking tablets are going to mess with next gen console sales. A 2013 tablet at $500 bucks is not going to be anywhere near the same graphical ability of a 2013 $500 console . It will take years before tablets catch up to the graphics of next gen consoles .
The 360 launched in 2005 and its just now that portable devices are catching up to it in terms of graphics .