Its naive to think the Wii represents a throwing in of the towel of all technological or graphical exploration. The Wii is not advocating a standard of yesterday's graphics for all gaming to come, the Wii is merely a symptom of a generation where the economics are not in favor of pushing these technologies yet.
If pushing these technological boundaries as the 360/PS3 are is hurting the market so much then clearly the market and economy behind it isn't ready for it and that's what Nintendo saw. You like many gamers have mistaken the Wii's modest abilities for a new strategy for cutting costs when in fact its the only console this generation which has adhered to the standards of cost vs capabilities that have dictated the system specs of every console of every generation before this.
The 360/Ps3 are not true next gen if the generation can't afford or support them. Every generation before this we have accepted there is a leap ready for us in graphics and technology, yet now that we've reached a plateau (which the Wii represents) its all too easy to just assume Nintendo gave up trying to compete while the 360/PS3 are "true" Next gen.
There is more to the market than just the games.
