Yeah, E3 is close, and even i am (didnt think it'd happen after the wii came out) excited about Ninty's new Console.
So yeah, lets suggest the Hardware's Power! .. but please, be kinda realistic.^^

My Suggestion;

IBM Tri- or Quadcore CPU. with three Cores, i'd suggest it'd be near to the 360, with around 3,4 GHz. As Quad, i'd say around 2.8 GHz. (A Quad would be awesome, because the fourth run could handle the OS while a game is running.)

512 - 2048 MB Ram (GDDR3?) depending on if shared with the Graphics memory. (512-1024 if not)

Graphics: ATI Mid-Class Chip, near to the already rumored r700 series, (but a bit tweaked) which could lead to a graphics Chip close to ATI's 4k series, where i'd say its most likely more the 4600 HD than a 4800 HD. (since they simply dont need more to port current gen Software. more futureproof would be the r800 powered chipsets, but that would be most likely much more costly.)  it all comes with 512-1024mb of Memory.*

(I think we can call it pretty much confirmed that IBM and ATI will be delivering CPU and GPU, since Ninty is working with them since the Cube, and both are good Companies. Oh, and IBM is delivering the Processing Units of 360 and PS3, too.)

Hard Drive: I think they'll dont have one. If any, they'll have internal, non-exchangeable Memory. (12-160 Gigs, depending on how much Media they allow on the Console. if you cant watch Videos but only Save Games, it wont be much.) But i think they might have some Gigs built in to the controller. SD Cards (Compatible with High End storage SD Cards or equivalent)

Else:

Online Connectivity: I think Friend Codes will remain, but they can be disabled (/or enabled) by People above 18 (17-21, depending where you live) . If disabled, you can Play whatever you want with who you want, and you can turn it on for your childs Accounts.

Cafe Ware, Virtual Console; I think this will remain, and get some nice additions, with - last but not least - totally useless Apps like we have them in our Iphones and Androids today. (VC Games might be Playable with only the Controller, while the Console's turned off.)

The Drive: I predict that Ninty will NEVER EVER use a Blu Ray drive. (and it hasnt anything to do with Sony; I think its just Nintendo's way to have their own, self invented Discs) and i think they'll be able to keep 8 Gigs of Data. double the ammount if Dual Layered.

___________

So yeah, suggest something. =D

You could get some nice looking games out of the specs you suggested.

We have to bare in mind controller cost could mean less money to spend on internals though.

Yeah, but i think really the final specs will be 'like that'. Porting a Game either costs TIME (up to.. a LOT time), or Hardware. and i think Nintendo wants ports to be easilly done, so they try to pay with both. (A bad port of The Legend of Zelda (NES) could trouble the performance on the SNES, for example.  so it HAS to be more. but well, this is kinda a definite thing to happen, even if not that much more.)

to the second thing;

yeah, totally agreed. thats why i'd suggest them to have 12Gig internal Memory built in for 3-4 Bucks, if they dont intend to make Cafe an Multimedia device. (But who knows before e3, huh?^^)

edit: The only thing that might dissapoint me in the end, could be the fact that they dont need 2Gigs of Memory (for Ram and Graphics), which could lead to just having 512 for either Part. (1gb in total then)... but Memory will mean a lot in the future, because the main difference will be Textures Next gen. they really could rise with enough Memory. (Again, just what i am thinking will happen)

The controller will not be a console so you won’t be able to play games on it while the console is turned off. That would be too expensive.

The console will act as a streamer to the controllers so it has to be turned on. But then again with Nintendo you never know :P

I would be very surprised if the GPU was close to a HD 4650 as you suggested.

That card is basically as powerful as the 360's, and today you can buy a card like the HD 5570 for $60. That's twice as powerful as the HD 4650 and its power consumption is low enough that it wouldn't make a very hot console. A HD 4830 / 5670 with a die shrink to 32nm is also possible.

For memory I would say at the very least 1 GB.

I haven't thought much about the rest yet...

CPU:
IBM Power7 @ 3.7 Ghz and 6 cores.  Out of order execution and 4 way simultaneous multithreading for 24 total threads and no more waiting for in line instruction execution. (possibly reduced clock speeds for lower price and thermal impact.)

GPU:
AMD Northern Islands.  Juniper model.  Direct3D 11 compatible and Shader Model 5. 

RAM:
1 GB 1T-SRAM VRAM and 1 GB DDR3 system RAM.  12 MB embedded DRAM frame buffer.

3 million billion gigaflops mindjack

Super-real-feel slik lips

Holographic waifu feature

Specifications

10-20% more powerful than the 360