Infinity Blade asks for 3GS or better devices, which I'm told is because it uses OpenGL ES 2.
Will every game made with the iOS version of the UDK only work with 3GS devices and up?
UDK for iOS requires OpenGL ES 2.0, which is not available on the PowerVR MBX GPU featured on the devices prior to the iPhone 3GS. In other words, valid targets for the iOS UDK are:
You need a device that supports OGLES2, so yes.