I've noticed it gets hot (though not burningly so, for an adult at least) in the area above the battery when I play some fairly graphics intensive games (I haven't been doing a lot of that yet though), but for everything else it never seems to heat up to more than merely somewhat warm.
I don't really know what to expect in terms of heat generation from a powerful phone, as this is the first smartphone I own (although my 2nd gen iPod Touch can heat up considerably as well during gaming), but obviously PC hardware can get very hot under load, approaching 90 degrees Celsius - or even more - for some graphics cards, even with several large fans to take care of the cooling.
Obviously those numbers can't be used as an indication for hand held devices, but the fact of the matter is that powerful hardware will generate heat - often a lot of it - when under heavy load.