Handheld gaming should stay single player focused.
There's no need for local or online multiplayer on handhelds. It's a nice bonus, but at their core, handheld games are for you to play on a bus or plane or something.
I've played a few multi-player games on the DS and my only real complaint is the battery-suck that occurs when using wifi. I think if the handheld market is going to focus on more multiplayer-featured games then something (at least in the DS' case) has to be done about battery life.
I think it should stay sa a single player experience on the handhelds. Any more is just convoluted...
I have mixed opinions about the entire thing.
According to some reading I've done the appeal of portable multiplayer gaming is something that exists more in Asia, and I guess in Europe to some extent, where mass transit is far more commonly used by more people than in the US. There are people who commute to work and school on buses and trains and such in the US but not quite as many, especially outside of big cities and the like. Being able to link a game with a bunch of friends for a 30-45 minute train ride and kill a monster is a big deal. Games like the PSP "Monster Hunter" franchise are a big deal overseas largely because of this. People can play them offline (single player) to power up characters to show off and co-op in quests with a time limit based largely around what are supposed to be average travel times. I've read a bit about the phenomena, and I figure the same logic applies.
Here in the US however, people are far more into independant transportation through the majority of the country. I think it's far less common for people to be travelling to school or even work every single day on the same train or bus with the same exact people. Mostly when I whip out a portable it's while hiding at an awkward social event, or while waiting in a doctor's office or something. I bought my aging portables back when I was working in security and could spend long hours stuffed in some out of the way back hallway watching a door with a broken lock or something, not to mention the fact that the Casino used to provide an employee shuttle service so we wouldn't use patron parking. We'd park at outside lots and be shuttled in. Even so such portable gaming wasn't very social.
Unless there is some way to set up a reliable internet connection for portable games that is also very, very cheap, I don't see much point. Even with that, I'm still more likely to use my PC or a full-sized console if I want to play online.
At least right now I do not see social portable gaming being something in a huge amount of demand in the US.
It can work, but the game has to be right for it. Monster Hunter Freedom Unite is so Epic in scale and boss fight difficulty you sometimes need an extra person or three to help you achieve certain goals. By the same token, small interactions which can take place over 5 minutes or less, like puzzle games against a human foe work very well too and are perfect for handhelds.
What doesn't work is games with an allegedly strong narrative which take themsleves too seriously or games with very busy environments, the screens are small enough to make finely tuned aiming through gaps in buildings a chore and Monster Hunter Freedom Unite pushes this boundary about as far as it can go.
I do agree with some of what Therumancer said about Americans being Car-dependent. However, if you have siblings each with a game system in the back seat, they appreciate the opportunity to engage each other whether that be in combat or cooperation. As for the internet connection, Ad Hoc Mode on the PSP works perfectly for another gamer within about 40 feet or so.
Consider how amazing it would have been to be able to have fun with your friends after school while waiting for the bus, that's the market they need to hook, who then take it to Uni and play with other likeminded friends during breaks between classes when they're supposed to be studying. I'm not sure you can argue there isn't a market for that, but again, with very few Americans commuting to University and therefore returning to Console Bases between classes, that's less likely. Europe and the rest of the world, doesn't function anything like the huge dormitory culture the US has.
I'd say multiplayer gaming in any form will always have a future, and while it may not be the main selling point of a handheld game it could definitely make things very interesting. Imagine you're sitting on a bus or plane, easily tearing through the NPCs of the latest fighting game, when all of a sudden you see "A challenger has appeared !" flash up onto the screen. Your eyes flash up to the rest of the people in the area whereupon you see another player a few seats over who is making a taunting gesture at you, a confident grin on his face. With determination you focus on the screen in front of you; ready to face this nameless opponent with unknown skills.
While this may not be a common occurrence it would certainly spice things up and would be a great way to unify the gaming community. You may never know the person personally or even know his true name but your handheld will never be too far. Always waiting for the next challenger and the next exciting match.
For me, I play on a portable at home as often as I do away... I can play it somewhere quiet if the living room's noisy, I can play it when someone else is watching TV, etc. Portable games are also great since they're generally designed to stop on a dime if you need to do something else.
So I think there's plenty of room for regular multiplayer modes like you'd have on a console or computer game when it comes to portables... designing new (or reusing very old) kinds of multiplayer game options specifically for portables on the go is a different design challenge. Some games do brilliant things with it.
Armored Core:FF for the PSP let you download other players' teams of robots with customized builds and AI parameters. I'd love to see the ability to play with or against an AI "ghost" of another player become more common.
Field Commander for PSP has it all, custom levels, save-states on game on disconnects, along with supporting a purely play-by-mail mode where you upload and download the battle one turn at a time.
All the new roguelike adventure games (Shiren, Pokemon Mystery Dungeon e.g.) on the DS let you post your party's distress call when you wipe out in a dungeon, for another player to download as a quest, come save your bacon, and post an all-clear message to revive your party.
Demon's Souls bloodstains and hint messages are another example of something that would work well for semi-connected multiplayer.
I have to admit I've only played Jump Ultimate Stars, Advance Wars: Days of Ruin, Pokemon and Animal Crossing over the internet, as far as handhelds go. I liked the interaction you could have with other players and their towns the most in the latter, though. Multiplayer games don't always have to be about competition, but they don't even have to be about fighting at all. I think Wild World is a good example of that. In any case, most of the time I play multiplayer, whether it be on the PC, a console or a handheld, I usually do it with my friends, so the actual ability to get online while on a bus or something doesn't really affect me much...
The WoW auction house app for iPhone is probably the most exciting multi-player game to hit the market, in terms of what it could do for handheld games as a whole... I hope it catches on, portable games that let you play some real part of a much bigger and higher-spec title.