I think Nintendo's next home console should be powerful in order to attract 3rd parties. It's what's preventing them from dominating the industry. The rise of COD has pushed Nintendo to the rear in the views of the mass-market customer. GTA as well. Who knows what other great third party title may come along and be the "in" thing, and if Nintendo doesn't have it, their system won't sell. This is especially important as long as they are struggling to come up with an innovative and exciting new IP themselves. Personally, I do think they can "merge" handhelds and consoles in another way... by turning Wii U into their next true handheld in a tablet-like form (as suggested by Soundwave). Same or ported software for both, similar power, etc. This would salvage the Wii U development if it doesn't sell. But the next true home console should have lots of power to do whatever consumers are demanding at that time, which could be as long as 10+ years from now.
The only way a low-power system could work is if it offers something totally amazing on the controller or software side, and eureka moments are hard to come by.
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