The iPod wasn't built for gaming. That much is obvious. The iconic touch wheel at its centre may be elegant, but it's never going to be much of a controller. For Peggle, however, lack of control isn't an obstruction to the game. It is the game.
To be fair, some skill is involved in Peggle. As the pegs thin out, you'll need to be able to roughly judge trajectories, consider rebounds and calculate angles, but these moments take up the least time and give, by and large, the least pleasure. Really, Peggle is all about randomness, and watching your ball cascade by sheer fluke onto the right peg is every bit as satisfying as pulling off a skilful shot.