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Knowing Nintendo it will be less powerful on paper, but still capable of producing decent looking visuals.

300 GFLOPS for the portable w/2GB RAM
700 GFLOPS for the home unit w/4GB RAM
Both use the same family of mobile parts, home unit is over-clocked variant with more CPU/GPU cores.
Cheap, very power efficient
New Controller Gimmick/Novelty

Nintendo is not going to compete with Sony. There's no plausible path to victory there for them, or at least they have convinced themselves fully of that. 

I'd be willing to pay more for something more powerful, but I don't think Nintendo really cares about that.