The graphics argument is so stupid and fundamentally flawed that its funny. Do you think Nintendo is completely incapable of throwing in some fancy cutting edge graphics chip or w/e it is to make their products run in 720 or 1080? The bottom line is YES they could have and they know that there is a market of gamers who have hardons for graphics. However they CHOSE to not put in the latest graphics because they valued the gaming experience higher than visual aspect.
The weakest things about the Wii are its lack of usage regarding the Calender, VC, and Online Capablity when it comes to games. I think the Wii has a whole lot of diverse games on the market right now from fun children games to more mature content games like The Godfather. Another problem it has is getting more units out there so that they can be sold and doing the best they can to get more developers on their side.