Part of this decline is for Nintendo to blame but mostly its simple economics.
As has been stated before there simply was not enough enticing first party games from Nintendo to unlock the potential of motion controls and show third parties the way. After Wii sports and its sequel there was no other flagship new game, baring WiiFit, to differentiate the console and keep the mass market hooked. Sure NSMB was big but it could have been done on the Gamecube, the only Wii ethos that it encompased was the local multiplayer. I believe that a big aprt of the expanded audience just sort of forgot abouth the Wii
Secondly it is evident that the real power lies with thirdparties and cross-platform ports, first party games are really just the icing on the top. The Wii being so underpowered got very little in the way of competent ports and third parties didnt really have much budget left to make Wii exclusive games that werent low quality (with a few notable exceptions).
Xbox360 and PS3 are much more attractive propositions for big budget third-party projects as they offer further ways to monetize games( DLC, online multiplayer, subscriptions,) are easier to port from one to another and have the effect of 'locking in' their consumer due to their game community orientation with friend lists and such. Furthermore third parties had built their engines, skill-sets and finances with Sony/Xbox domination in mind and the mentality of making a certain types of core games that it was too hard for them to migrate on mass to the Wii and start making quality expanded audience games.
I think there isnt much steam left in the Wii although i consider the project very succesfull for Nintendo and they should be pleased. For their next machine they need to be closer to their competitors specs, however concervative that sounds, strengthen their third party relations, and focus their first party output so that they can exploit their next machines unique hook properly (whatever that may be). Nintendo seem to already have takes some of these steps with regards to the 3DS so things look encouraging.
As for this Christmas, its hard to tell whether the Wii is still high up in the collective consumer mindset but the signs arent encouraging. The red Wii will probably offer a small-ish lift but I dont see the Christmas line-up as especially strong. Sure Just Dance 2 will sell 4-5 mil (or possibly more) and so will Donkey Kong, but i dont consider the latter to be a system seller, especially in Europe. I think there is a good chance that Wii might not come on top this year but its very hard to tell.
Personally the only Wii game I want in the rest of the year is Epic Mickey as in classic Nintendo fashion Europe is getting shafted again with Kirby moved to next year. Also where the fuck is Cave Story!!!