It is a reality. There are a couple of emulators of many popular older consoles available. However, their use is somewhat legally problematic, depending on were you get the ROMs. I will thus refrain from linking to anything concrete in here if you don't mind.
Sony "just" released the Xperia Play which can play a small number of PS games. Maybe some more will follow.
The problem is not mainly the technical but the legal. You need to get the rights for the games. And even then you need to adapt the game play to the different hardware. Seems somehow easier to just redo a successful game and using current environment and development trends. Most emulated games look outdated and are mostly interesting for hardcore gamers or nostalgia.