For development purposes, "horsepower" still matters to a certain extent and stating otherwise seems a tad foolish.
I believe that the next Nintendo machine (late 2010 or early-to mid 2011) will be about on par with the 360, possibly sporting a simple multicore processor and a decent videochip.
The most improved aspects of the next Nintendo, however, will be memory and storage, which have turned out to be the weakest links.
The greatest advantage of having the cheapest hardware would be the fact that you can fix or improve upon the machines weakness' without the cost of doing so erupting completely and with a good margin and it will also probably be quicker in the making, both development and manufacturing.
Of course, the above model assumes that Nintendo will choose the exact same route one more time, which I think is a little unlikely, they cannot afford to develop and release on simple and past surmission when they have (finally) taken back first place and they are too clever and experienced in the game (literally and figuratively) to fall into that pit imo.
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