I don't think graphics will be a decided factor going into a next generation. IF there is a true next generation. MS and Sony may instead opt to try to find ways to renew interest on their current hardware with new input devices or software patches instead. Certainly Wii U does not necessitate them going to newer hardware. It's only now competing tit for tat with their current gen offerings.
I think MS and Sony will be more concerned with cloud gaming and any possible entry from Apple than what Nintendo is doing with Wii U.
If someone introduces a game streaming service akin to Netflix, the current model will be in serious trouble for all players, although probably less so for Nintendo who can live off their own brands and have a unique interface device. If third parties flock to cloud (or Apple), and it's less expensive for consumers (imagine unlimited new games for $60 a month, or less) then Sony and MS will be in massive trouble.
As for Wii U's success. I hate to admit it, but I have to agree. It's simply not compelling at the moment. Some ingenious software may change that but not anything we've seen so far. The fact that it plays the same 3rd party games the current HD twins do is practically irrelevant when pretty much anyone and everyone who wants to play 'core' HD games will already own an HD console or two by the time it comes out. Nor is it currently compelling enough to pull casuals into investing in yet more hardware. Frankly, I'd be fine with my Wii. I'm really tempted to say as long as games kept coming out, but really I'm so backlogged it'll probably take me three years to finish the games I have now anyway, and I'll be buying a few more this year (Zelda, Kirby, Xenoblade, TLS?, CoDMW3, etc)
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