Relative power has nothing to do with success, that's what Nintendo realized this gen. Their graphics didn't have to be better than the PS3, or better than the PS2, or better than the NES for that matter. It had to be "good enough" for the mainstream expectations and that are incidentally around the 6th gen level.
There is no rule that "casual gamers always like a generation older graphics than hardcore gamers". No, they always like graphics that are "good enough", and that is a constant, not related to the evolution of graphics at all.
Of course the "next Wii", that almost surely won't be a Wii, might have more power, but only if it is required for some new form of innovation that needs more processing. Other than that, graphics don't matter any more.
