Popped in on Gizmodo right now, only to see this. I can't say I didn't see this coming being aware of the GPU power present in the iPhone 3GS, made possible by OpenGL 2.0. Still, I'm just going to say it... WOW.

Epic have so far just released a demo of the Unreal Engine 3, that powers the big guns in the gaming industry, Gears of War and BioShock, Unfortunately, if you're an iPhone 3G user, you're going to lose out, because while future games will probably work, albeit with worse graphics, the developers plan to shut you out from running them. From what I've read, EA have said that the iPhone 3GS is faster than the Nintendo DS. So iPhone 3G users, you guys are in for a real treat in the near future!

Open GL 2.0 ES brings the kind of textures, shadows and lighting we're used to on high-end PC games. We're still not at the level of top-end console graphics, but obviously this is a step in that direction with endless possibilities. So basically everyone is going to be astounded when the iPhone 3GS comes out with a new set of gaming titles in the near future.

I don't think hardcore handheld gamers will be too eager about this though. The absence of physical buttons and the lack of a proper controller is going to be a change that will be hard to adapt to.

Does this spell the end of the DS and PSP? Far from it, really. I think there's a long way to go before this technology becomes mainstream. Also, when you're developing a product aimed at a specific audience (gamers), you've got to have your product tailored to the needs of a common member of that audience. So I think Apple would be taking a bit of risk by forcing the whole touch-gaming experience on its consumers. Will it work? We'll know in time. Then again, the Wii was something similar with motion-sensing, but to some extent I feel that was a bit of a gimmick, but that's just my opinion.

Anyway, purely from a technology point of view, I think this is worth enjoying and I believe we'll see something similar attempted on the Android possibly, in the near future, with Epic suggesting that they are planning "to make this available to licensees at some point in the near future". We're all looking forward to that.