I can only speak for myself, but a lack of variety is why I left Nintendo in the first place. You want platformers, Nintendo is unquestionably the place to go. Most other genres? Probably not. Good storytelling and complex characters? Not really a focus for Nintendo.
As far as Mario goes, I'm of the opinion the high sales for anything with Mario is kind of a conditioned response. People have shaped their opinions around the name on the box more than anything else. That's what happens when you have a pack-in game for an iconic system. Many people buy a Mario game with their minds already made up that they will love it, thus it has kind of defined videogames for them.
Will Mario ever be milked to death? That's hard to say, since Mario is Nintendo in a lot of ways. Nintendo knows now, I think, that it is not in their best interest to let the quality drop, which happens with a lot of third party franchises. That wouldn't just hurt the Mario franchise, it would hurt the Nintendo brand badly.
Personally, I just don't get Mario, and probably never will. I see nothing at all compelling or interesting about the character or universe, nothing that would prompt me to follow it from game to game. I would rather have unique characters and worlds for games in different genres.
