No hard drive.
Neo Geo games aren't that big either, some N64 games have similar capacity, so that point is moot. Nintendo will probably try to get better compression rates for these games and WiiWare titles instead of announcing and offering a hard drive.
Yes and no... the biggest Neo Geo games are still two times the size of the biggest N64 games. My assumptioni s that they will make it so you can play games off of SD cards and be done with it. They don't want to make a HDD, and they probably don't think that gamers even want one much like they though gamers didn't want online last generation.
I've looked up the sizes of Neo Geo games on wikipedia and the biggest I have found is about 716 Mbit, while the biggest N64 games are 512 Mbit.
Besides, most N64 games are 128 Mbit (16 megabyte) or lower while AFAIK most Neo Geo games are in the 300 - 330 Mbit range (about 40 megabyte). That's a lot, but still allows to store at minimum 10 games on the Wii's flash memory. Also, the games not neccessarly used up all the space on the original cartridges.
About Nintendo and their thoughts what gamers want: How many consoles do you know which heavily supported online and were profitable? How many consoles had a build in HDD and were profitable?
Point is, if only a fraction of the market is willing to support something it most likely isn't a viable business. In this case Nintendo was right, that gamers didn't want online last generation. Yes, there were people complaining about the lack of online on the Gamecube, but the vast majority of people still had a great experience, they LOVED their lunchbox.