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in my opinion, it is hurting it short term, but it will benefit it long term.

in short term, it's getting more casual gamers, and therefore, publishers release games geared toward the casuals.

but in the long term, it's getting more hardcore gamers. younger kids who start on the wii, may end up owning a 360, a PS3, or a gaming PC (or may buy the next xbox or the next playstation). Even casual gamers who arn't young, may still end up buying one of these. Such as older people who have been introduced to gaming, they may actually like it, and may become hardcore gamers (though i believe that this won't happen nearly as much as with younger kids).
This may also happen to Female gamers. i'm not saying there arn't hardcore Female gamers, as there some female members on vgchartz, but in comparison to Males, there's a lot less.