iPhone as powerful as the Dreamcast, more powerful than the DS ... but is the interface the weak link?

According to SEGA, the iPhone is as powerful as the Dreamcast console and more powerful than the DS. But it's not just about the horsepower, what about the interface?

OK, I'm going to begin by saying that so far I've tried a few games on the iPhone (OK, iPod touch, but it's the same) and they're pretty neat. The graphics are indeed pretty impressive and the App Store currently hosts some good games (Super Monkey Ball is my current favorite). There's no doubt that the iPhone/iPod touch is powerful enough to handle gaming (putting the battery on one side ... gaming sure does eat the battery), but is the interface good enough?

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I foresee three issues holding back the iPhone as a gaming platform:

• First, the tilt mechanism, while good, is far from perfect. In fact, when playing Super Monkey Ball I'm finding myself fighting against the accelerometer more than I do against the game itself. Compared to the Wii Remote, the iPhone feels sluggish and unresponsive.
• Secondly, having buttons on a touchscreen really just don't work. You have to look to find them and there's zero feedback from the buttons (why would there be?). Perfect example of this is the punch button that appears in Moto Racer - you have to look at the button in order to be able to find it with your thumb. Also, the more you cram the screen with buttons, the less screen you have to play with.
• Given the limited interface, games could become repetitive.

I'm pretty sure that thing will improve over time, but it's hard to see it evolving into a credible opponent to other mobile gaming platforms.

Thoughts? If you've played games on the iPhone/iPod touch then what do you think of the interface and the gaming experience.