I'm thinking the opposite - it's odd how EA is all over the iPhone at all, given how little money they can make at the low prices games sell for on it. It's perfect sense for Activision to not want to lose money

I mean, think about it - to make an iPhone game at DS quality requires a team about the size of a DS team. But the DS game will sell for $30-35, they get to keep around $20-25, and there isn't nearly as much competition, let alone free and super cheap competition (sure there are tons of DS games...but on iPhone, we've got 10,000 games in a single store). Guitar Hero's a good example - there are 4 or 5 music games very similar on the iPhone, some free, some $5. And with the new ability for games to access your in-device music library, it won't be long before a game comes along that lets people create downloadable tap-lists for any song (there's already one for Jailbroken phones). The Guitar Hero name wouldn't mean much in the face of that competition.
Apple really needs that rumored $20+ high-quality-game app store section to really get the big developers.