I expect that when Nintendo switches to a 65nm (or possibly the 45nm process) they should be able to overclock the GPU to a level where boosting the resolution should not be a problem; the GPU might end up having some redesign (possibly increase the number of pixel pipelines) but it wouldn't require anything too major (If they wanted to go crazy they could include texture filtering to improve the quality of textures automatically when it is displayed at a higher resolution but that is probably not necessary).
The only real question is why would they bother?
A flashy-first game is awesome when it comes out. A great-first game is awesome forever.
Plus, just for the hell of it: Kelly Brook at the 2008 BAFTAs