Back in the day there were countless debates over whether the Gamecube or the XBox was more powerful, and (for the most part) people came to the conclusion that the Gamecube and XBox were (overall) fairly similar in performance but achieved that performance through different means; and it could be said that one of the reasons why Microsoft went for an IBM-ATi combo this generation was because of how powerful of a system those companies produced with the Gamecube at such a low cost.
Regardless of all other factors, one of the core problems the Wii has faced as far as producing impressive games is that there has been very few developers who are even trying to push the Wii; and no publishers have devoted their top teams to producing big-budget Wii games that would be the most likely to show off what the Wii can do. I know people are going to minimize this, but when the most technically advanced game on a 3 year old console comes from a (previously) unknown company on their very first game on the system on a shoe-string budget, when the company has a track record of producing licenced crap, it should be a huge indication of how little effort has been put forward by third party publishers and developers.
Now, the reason why so many (decent) developers favour a less realistic art style on the Wii is that (with the exception of a couple of games in certain genres) no console produces photorealistic graphics and when they attempt to the results age very poorly. Even if you pushed the Wii to its limits producing a photo-realistic game the end result would look like a 5 year old game that doesn't look that good. On any system stylized graphics can look really good and age very well, and the quality of product produced depends more on the quality of your artist than the processing power available.
