Software emulation is highly related to many factors, like architecture of both machines, proper coding of the emulator software, etc.
The Dreamcast was already a very friendly machine, that's why you have this DC emulator that requires between 2x-3x the PC power compared to a Nintendo 64 one, despite that the difference between the machines is much bigger. That's why you don't see the PS3 software emulating the PS2.
In any case, if Sega provided Nintendo with a good software, I easily see the Wii pulling out DC emulation, but then again you have the space problem... and I'm not sure if those GD things could be compressed any more.
@souixan: The Arm926 on the Wii is an extra chip on the GPU that does some functions unrelated to graphics. The GPU is an ATI.
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