Time to market. Nintendo has the latest and greatest out now, so that is the market to develop for. This will probably give them the time they need to absorb more of the devs attention and hopefully more titles. If that happens, then all these other things will become less relevant (being embarassed to hold one, 3D, etc)
Also being that the DS has pretty much dominated this market already, with backward compatibility, there is added value there.
To be honest, I think the gaming phone is where the market should go. At least you can bring that into the crapper with you and kill half an hour or so at work.