Well, successful hardware has always followed the philosophy of "Do one thing, and do it well.". Sure, the N-Gage looks cool, and sounds like a good concept, but it has way too many drawbacks.
I can already see it flopping. For one, it's too expensive. It has some serious design flaws too. They really need a different format to store the games. It should be easy to pop a game in and out as well. It also has too many buttons, yet lacks a pair of shoulder buttons.
If anything could come close to upsetting the GBA, it would have to be the GP32. I just see N-Gage dying a quick death, if it comes out at all.