I think Nintendo should've released a Wii HD in late 2010, with a better CPU/GPU (still cheap though) and more RAM ala the Game Boy -- Game Boy Color leap and bundled it with the Wii Motion Plus controller standard.
256MB RAM + bump the eDRAM to 6MB or something to allow for 720p resolution. Revamped OS with a better eShop and encourage indie devs to offer more software to keep the platform going with new games.
$169.99 at launch, could be $99.99 by now and still sell for 3-5 more years IMO.
The "Wii U" should've been a different brand if it was going to use a tablet controller (I've suggested "New Nintendo Entertainment System" or something). Wii should've remained reserved for the Wiimote controller/motion gaming/budget gaming.
My two cents, but I think the Wii could've sold as a casual/budget console for another several years if Nintendo had done this and using the Wii brand for the Wii U hasn't helped that console one bit at all (probably is hurting it if anything).
Wii HD - $99.99
New NES - $349.99
3DS - $169.99-$199.99
I think would be three pillars Nintendo could sell for years and are three distinct brands that can reach three different audiences.