I think refreshing the existing Wii would've been a really good idea around 2010 and could've extended the Wii's life cycle, keeping it cheap.
A $99.99 Wii Plus that could run on HDTVs and maybe could even run a basic version of Miiverse with a nice new eShop would clean up.
Nintendo wouldn't have to support it so much, they could put hundreds of back catalog games and VC titles up on the eShop for download. And encourage low budget app downloads. Casuals are not like hardcore players, they don't need some big new game announcement every 3 months.
It would be a great buy for people who just want a nice party/casual machine around the house and don't need the highest end graphics.
It probably also would keep the Wii selling longer so that there'd be no chance of the PS3 catching it, which is unlikely but not necessarily impossible.
"Wii" is synonmous with casual gaming and the Wiimote itself. Keep it focused on that, trying to create some kind of bizarre Wii successor that's "sort of" for casuals, and "sort of" for hardcore players I think basically has yielded Nintendo a system that isn't all that appealling to either audience.
Wii U is too expensive and the controller is in a lot of ways the antithesis of the Wiimote (big, bulky, tons of buttons, takes gaming back to sitting on the couch) for casuals.
It's not different enough from the 360/PS3 to please the hardcore who want something legitimately a large step beyond after 6-7 years of the PS3/360 generation.
