This sucks.
I was really hoping the Wii U could repeat the magic of the GameCube, sell a little while having tons of great games, but it looks like it will be much more inline with the Wii's situation. I never expected the Wii U to look better than PS4 but I expected it to be comparable. Now I need to edit my picture. :(
As far as gens go, I'd argue the Wii U is gen7. It came out during gen7, is currently competing against gen7, and is comparable hardware to gen7. Yeah it is the successor to the Wii but it's more complicated than that. The iPhone first came out during gen7 portables so we'd all agree it's gen7 (if we act like it's a dedicated gaming device). Now the iPhone 5 just came out and it's obviously gen8 (again ignoring the fact it's a phone). If we went just by successors it would be gen13 which makes no sense.
I argue that both the Wii and Wii U are gen7 systems due to when they released and their relative power to other systems. For those arguing it's gen8, what would you call Nintendo's next system if it released in only 4 years competing solely against the next box and PS4? What would the next generation be if Nintendo releases the Wii U 3 at the same time as the PS5?
