I don't think there will ever be an HDD in any Nintendo device, given reliability concerns. If they do expanded storage it will be solid state flash storage. Or they could just let you run game directly from the SD card which would probably require a modification of their DRM scheme but would be a cheap and simple way for everyone.
I do agree with the argument that the Saturn could be complex to emulate. Mamy of the guys who wrote those Saturn games in the 90s have probably moved to other jobs and other companies and other industries right now. I don't know a lot of Sega Saturn games I would be interested in though. Maybe Panzer Dragoon, that might be the only one.
I don't agree that DivX and MP3 are modern codecs. These are just terribly, terribly outdated -- something like the MS-DOSes of the digital media age.
Nintendo have just removed MP3 from the Wii Photo Channel and replaced it with AAC. The natural choice for a video codec would be h264.
Hardcore gaming is a bubble economy blown up by Microsoft's $7 $6 billion losses.
