I have to agree. Much as I wish there was a handheld, java-capable device out there, aimed at the games market, I can't see this doing very well. Whoever okayed this idea at Nokia needs a slap to the back of the head....
Check out Sony Ericsson P800. It have Personal Java and MIDP. Really cool gaming devices (it will come with two 3D games preinstalled!), with touthscreen, plus, what could be really important, removable Memory Stick. It looks that Sony is doing really great job.
BTW. they added Memory Stick to Multimedia Home Platform (interactive TV) so Your game could run on mobile phone and TV at least on devices done by Sony.