I have no doubts that Nintendo is probably working on a WiiHD--they'd be foolish not to be working overtime to craft the next iteration. After all, they played extremely safe with the Wii--it was just a GameCube peripheral given the spotlight, after all. Proof of this is that Nintendo just "supercharged" the GameCube engine and actually spent very little money actually developing the Wii compared to the engineering behind the GameCube or any other system, originally. They played it safe, financially. And if the Wii turned out to be a success, they'd reveal a new system that streamlines everything the Wii does.
After all, according to my personal view of console generations, this generation is supposed to be the "innovative stumbling block" and the next generation is to be the streamlined version of the innovative generation. Just as the SNES/Genesis streamlined what the previous generation innovated, and the GameCube/Xbox/PS2/Dreamcast streamlined what the 32/64-bit generation innovated.
Everything will be tested here, the motion controls, waggle, interactive rumble whatnots, touch-screens, voice recognition, and 3-D visuals with or without glasses. Once they know what does and doesn't work, the next generation will streamline those innovations.
I fully expect Sony and Microsoft to stick with their systems for now, and focus on their expansion efforts with the 3-D and motion crap. No matter what Nintendo does, it won't threaten Sony or Microsoft more than the Wii and DS do now. At best, they'll just have a streamlined HD Wii with much more reliable motion controls and graphics on par with the Xbox360 and PS3.
It costs way too much, financially, to jump to an all-new generation. The leap to the current generation was financially destructive to many companies due in large part to extremely high costs of game development and very low installed userbases. In order to actually move to a new generation in a couple years, the industry needs to find a way to transition more smoothly. For one thing, they won't be able to do another "kill off the old, force in the new" like Nintendo and Microsoft did with the GameCube and Xbox. That creates too steep a transitional step.
