Well, I'll give Nokia credit for trying. Microsoft had some pretty bad hardware design in the beginning, but the Xbox turned out decent. Hell, the Xbox looks ugly as hell, and the original controller was worse. But they listened to complaints and introduced the Controller S and ditched old Duke.
Granted, a controller is a lot less of an investment than redesigning the entire system, but its Nokia's fault in the first place for green lighting some of its baffling design decisions.
If the N-Gage 2 turns out to be a better thought out device and if they get a killer app or two, then they might have a chance. Until then the Gameboy will laugh and kick sand in its face. Unfortunately, Sony's PSP will probably turn N-Gage 2 into Dreamcast/Game.com.
(Not the biggest fan of Sony/Playstation, but I have to admit I think the PSP will sell well)