I'm going to talk about the things I would have done differently with the Wii as compared to the things I would have kept the same (or similar) with the PS3, because the pros and cons of each of the systems is pretty obvious.
With the Wii I would have increased the processing power across the board while not (really) changing the focus on keeping development costs down. If the GPU was able to handle (roughly) twice as many polygons per second, with (roughly) twice the texture data, and render at 720p/1080i (and Nintendo continued to ignore programmable shaders) you would be able to share far more graphical assets between the Wii and the PS3/XBox 360 while keeping cost increases to a minimum level for exclusive Wii development. I would probably have also used a modified Power PC 970MP processor running at 1.0GHz to 1.5GHz as the CPU to give some extra power for physics and animation. Overall, the system would not be much more expensive to produce and should remain in a similar power consumption range but would sit (in processing power) far closer to half way between the previous generation and the current generation.
On the PS3 (besides adding rumble) I probably wouldn't modify the controller. I believe that the Wiimote is the way of the future (and when it is revised with the Wii-2 it will be nearly perfect) the PS3/XBox 360 controllers are still valid for most games and are still very good controllers for some games.
