Unlike Japan, Nintendo has not invaded the entire home consumer market here in the United States. This leads them to believe there is room for both the DS and the DSi here in the United States. The DS will no doubt be a cheaper alternative to the DSi and the DSi isn’t going to make its way to the US for some time now (well into 2009 we hear).
Right now we’re still working through what the strategy’s going to be here. But we think that there’s huge untapped potential for the DS Lite. Because when you’ve got only one in every five households in the U.S., compared to one in every two in Japan, it says there’s potential.
You’ve seen some of the work we’ve done this year with celebrities, that we’re bringing a lot of new consumers in to the DS. So I think there’s opportunity for both of them to coexist for some period of time. (kotaku)
We all though the DS was taking over the market, apparently it’s going a long way to go. Nintendo probably feels the DSi may take some of the market share for the original hand held so they’re going to keep them both in the market, initially. No doubt, the DSi will eventually out-live the DS over time, but there is no reason to take the DS out of the US market until the market dominance dies off.
One of the great downfalls of an acquisition or merger, in the game industry, is the loss of great franchise titles. Sierra, or 
Reportedly we’re going to see smaller 45 nanometer cell processors in 2009 which leads to similar cost savings as we saw in the Xbox 360 hardware. Cost savings appear on the manufacturing side, of course, along with less power consumed by the processor leading to less heat generated by the console.