I think the point that needs to be made here is that eventually (Sometime from this gen to the end of the next gen) most households will have an HD ready television set. These people will be used to HD programming, etc.
I think it's pretty obvious that Nintendo may very well need to release an HD system with the direction things are headed. A system atleast capable of 720p.
In this regard, Sony does have a good strategy. I don't believe how you can expect Nintendo to go what amounts to around the next 10 years or so without an upgrade to the HD-front.
Given the typical strategy of Sony (10 year lifecycle) the PS3 isn't going anywhere anytime soon. The Move directly stands as what amounts to an upgraded Wii without the First Party Nintendo titles (While the Wii 3rd party titles are pretty meh IMHO, it still gives owners options. This is where if Sony can release a few solid games from in-house they will really hit pretty big. But I fully expect Wii / PS3 3rd party games to make an appearance on both systems. Big titles (Like Kingdom Hearts 3, etc) which again makes people purchasing question why even bother with a Wii unless you're dead set on specific Nintendo titles.
This generation might surprise people though. What if Sony / Microsoft push this generation longer? With the high development costs, high entry points into this generation. One has to wonder, maybe this generation lasts much longer for MS / Sony? And if it does, the moves they make now will definitely impact where Nintendo goes. Since Nintendo has the most work to do in terms of their hardware.