I know the Nintendo fans may dislike this statement, but... Nintendo doesn't get to define when the "generation" ends. They can replace the Wii, but honestly, then they'll merely be making a 2nd entry (some would argue a 1st entry) into this "generation", really.
If Nintendo does replace the Wii, the new "Wii HD" (or whatever) will be 100% backwards compatible, and most games will merely support HD as an "add on" functionality -- higher rez in most/all cases, and better textures in some cases (core games).
This "generation" has a good 3-4 years years left in it, maybe much more, given the rising costs (and dropping profits) of consumer electronics, which is the major factor in determining when a new console generation is affordable enough to start. Nintendo has the option to produce much better hardware than the Wii, yes, but it won't be much better than the HD consoles, if it is better at all, due to cost reasons and Nintendo's (very smart) intent on hardware profit.
I would argue that one of the major reasons the Wii succeeded, is *because* of the diminishing returns of improving hardware, and the subsequent lengthening of the "console generation". What used to happen in 7 years time, may now take 10, or 14 -- Nintendo saw that, and reduced the size of the step, rather than lengthening the duration of their product cycle, because in doing so, there was also an opportunity to profit from hardware.
