I would think that 256x192 is really the minimum resolution for handheld gaming now - despite the GPKiDS only have GBA size resolution.
Though, the GBA's emulators are pretty good - and I'm reasonably happy with the way they work.
Flubba's PocketNES is still the best handheld NES emulator that I know of - it's utterly amazing for what it's running on with high compatibility and 100% speed. The only real sacrifice is resolution limited to the GBA's 240x160 and even then, the clever use of line mixing simulates almost all the NES's pixels.
So, the GPKidS should be capable of something similar; GP32 8-bit emulators should port across okay and that's about it.
It's just a pity they didn't give it the 320x240 screen with 16MB of RAM. I'd be damn interested in it if it was - it would make a great, highly portable MAME device and I would port GP32 MAME in a flash...