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Can the 'Funnest iPod Ever' Take on Nintendo and Sony?

The iPod touch can be used to play over 1,000 games available on the iTunes App Store. Apple has even dubbed the touch the "funnest" iPod ever. What threat does it pose to dedicated portable gaming machines like the DS and the PSP? The iPod's lack of buttons may preclude it from large, immersive games, but casual games are a different story.
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