I have to agree with yuko, I have a 3G, PSP and a long time ago I had a PS2 (have PS3 now).
My Iphone 3G occasionally has lag not even gaming, the graphix are awesome (for a phone) but it certainly is not capable of Quake death-matches.
I dont doubt for a second Id Software could make a PS1 type game for the 3G, but not PS2 or PSP unfortunately. Furthermore the touch display is fantastic but I cant see it functioning well for many types of games, in particular a first person shooter.