Flood of bad games hurting sales and crashing the market? Ever looked at the full catalogues of the NES and SNES? Some unplayable and plain rubbish games, frustrating enough to inflict the gamer with a fury of biblical proportions. They were 2 extremely successful consoles.
I can kind of see where this article is coming from, though. People fall for the 'copycat' games and buy a couple of rubbish titles. They then become a bit bored and disenchanted with their DS, thinking that it is crap, with crap games. So, they go buy a PSP with a new, pretty action game and they fall in love with Sony and swear off Nintendo for life.
I don't think the above example would really happen with great enough frequency to totally destroy Nintendo, though. I just can't see it.
Maybe Okamoto wants more money?