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Depends on your defination. It sold 3.5m which is a huge hit by anyone's standards. That's a lot more than could be expected of Metroid, Star Fox, F-Zero, FE, etc. Heck that's a lot more than most 3rd party titles on any system.

However, as a system mover, it and Wii Music failed epically. You are right, they really failed to innovate with AC:CF and it hurt them big time. They were smart to focus on their female audience but they didn't take AC:CF anywhere near far enough into social gaming.

As proof, look at the success of that farming game on youtube. It's massive. Definitely a big miss by Nintendo but other developers only wish they could have misses (or even hits) like that.