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You say there's going to be conflict and a war between "core" and "casual" gamers... but do the casual gamers even care for there to even be a fight?

IMHO, I think that Nintendo won't try to do another Wii type of console, or if they do, it'll be a mistake. I just can't see, if graphics aren't a selling point to casual gamers, why they'll buy a more hi-tech version of the Wii. Unless they come up with something just as simple to control (I think it's a mistake for MS to compete against the Wii with the Arcade. The biggest problem for casual gamers with PS3/Xbox is the controller) and unique enough to significantly differentiate itself from the Wii, I can't see why casual gamers would want to buy another one.