just a business decision, which is, of course, influenced by visions of the top brass.
kutaragi has a different vision than iwata/miyamoto. the direction iwata/miyamoto has taken--based on their vision--is that growth in "hardcore" gamers will be slow and thus need to capture a new market and that's the motivation behind the wii.
that means hardware specs is not crucial to their strategy. ergo, cut costs wherever it can. so, why not use existing hardware with small upgrades. the fact that it's gamecube 1.5 hardware just happens to be a nice bonus for 3rd parties. this echoes what Origin said.
PS. the hardware argument is way overblown. if technology matters so much nobody would buy board games any more. i can see myself enjoying Wii Sports 20 years from now, just like how much i now enjoy the original Super Mario Bros. though i sure hope there's something more elaborate than the individual games from Wii Sports sometime within the next 20 years.
the Wii is an epidemic.
