1) The system that sells the best is not necessarily for everyone.
The system that sells the best does so because more people think it's great for them.
2) Lots of systems that don't "win" the console war still have great games for them and still provide tons of enjoyment for those who own them.
A system doesn't just need some great games; it needs enough great games to make it a worthwhile purchase. The 360 already has this whereas the Wii and PS3 are still struggling. The PS3's games have been mediocre whereas the Wii's have been a combination of crap and awesome.
With the Wii's low price, that's fine. It needs fewer awesome games to make it worthwhile since the entry price is lower. The PS3's entry price is huge so it needs a lot of great games to make dropping the $500-$600 to get one worthwhile. This is even worse when you consider that one can pick up a Wii and most of the great games to date for the price of the PS3's newest bundle. The comparison isn't favorable unless you're a real Sony/playstation enthusiast.
The rest is dictated by game designers. You can't make a good game if you don't have the money and you don't have the money if your system and its games aren't selling. A very awesome cycle if you're going up but very bad if you're going down. Companies like Microsoft with absurdly deep pockets add some tilt into this but otherwise it's a fair analysis.
