I don't know why, but the simplistic approach Nintendo has taken with the Wii makes more sense to me than what Microsoft and Sony have done with their respective products. When you really think about it, anyone, and I do mean anyone, given enough time and resources can build a bigger, badder, faster console. And furthermore, just as soon as someone does it there'll be another guy to say, "Hey, I can make something better than that." And given enough time and money he'll do it. Sure there is an upside to making a console that can do more, but in doing so you're bound to leave behind some of the guys who are trying to make good games. With Nintendo's next step being, for lack of a better term, a souped-up gamecube it will make it simple for developers to make the transition. All this banter aside, I couldn't care less about graphics. I'll take gameplay any day. One of my favorites games to this day is Mike Tyson's Punch Out, and I still play it regularly. Give me a good game that is challenging enough to be fun but easy enough to keep me interested and a robust, responsive control system and I'll be happy regardless of the platform.
I just thought of this after re-reading my post. By doing what Nintendo did with the Wii, they're going to make Sony and Microsoft have to play on their terms. They aren't trying to make the next biggest, baddest system. They're going to make Sony and Microsoft have to come up with better software. In essence, they're fighting the next-gen console war on a whole new battle front, making up the rules everyone else will have to follow as they go.