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2012 would be much more likely, considering the Wii's success... as for the hardware, lets assume that Nintendo will stick with ATi for their next console.

They could go with a cheap chip, let's say, a RV850, which on a card like the Radeon HD5670 sells for around $100 bucks at retail, and with a profit for everyone (the shop, ATi, the card manufacturer...). A card like that is way above both current "HD" consoles in terms of sheer power, memory, bandwidth, what not. Even better, it would be able to pull out Wii/GC software emulation without effort.

Even with a chip like that, Nintendo would be able to get a profit from every console sold... even if they released it right now and not in 2 years, they would be able to.