Most (all?) console generation cycles are determined by the end of year 1. At that point, 3rd party developers decide which system they will mainly support, which one they will normally port to, and which one gets the boot. This is based on the size of the userbase.
The Wii's userbase is huge, rivaling the X360's across all regions ('cept for Japan where it mops the 360.) And this was with Microsoft's 1-year head start (good job MS.) Devs are going to make games for the Wii until the next generation, no doubt about that.
Tech needs rarely drive gaming. If that were true no one would touch a console after about 2 years; PCs easily catch up and exceed them in that time. The "ooo, shiny graphics!" claims are a marketing ploy to attract early adopters so a console can build a large userbase before the year ends.
Only the Wii has a chance of staying in business for more than 5 years. The next systems from MS and Sony will try to play catch-up, while Nintendo can sit back and take their time working on the next system while riding their profits from the Wii. I mean, that's what Sony did with the PS3. While MS hoped and raved about how awesome the all-new X360 was, Sony leaned back and grinned "the PS2 is STILL outselling you, lol."
There is no such thing as a console war. This is the first step to game design.
