Just to add to Jarrod's point ...
There is a 'double edged sword' effect from new hardware which could benefit and/or hurt Nintendo when they release new hardware. What I mean by this is that we're at a point in time where inexpensive hardware is significantly more powerful than either the XBox 360 or PS3 but a large portion of this increased performance will be lost in diminishing returns and/or meaningless enhancements; basically, inexpensive hardware could render HD console games with double the texture or polygon detail, at 60fps rather than 30fps, at 1080p rather than 720p, and so on but the impact (visually) of doing so is minimal even though it requires a lot of additional processing power.
Now, this is a double edged sword because if Nintendo releases a system at that performance level they don't see much benefit from being more powerful than the HD consoles but (unless they are released 2 years after at a much higher price) the successors to the HD consoles don't see much benefit from being more powerful than this system; because it is unlikely that they will be able to produce anything that couldn't be produced on this system with a slight sacrifice to frame-rate or resolution.
Certainly, this is not an easy strategy to execute being that you need to sell your system on something other than raw processing power; but Nintendo may be a company that can pull this off given their track record with the DS and Wii, and how people seem to be anticipating the 3DS.








