I think Nintendo are more aware of this than they used to be, as can be seen by them publishing many story based games this gen like Another Code, Pandora's Tower, The Last Story, Fatal Frame , even Mystery Case Files can be seen as an example of this. Not to mention their own games which are heavy on story like Xenoblade and Other M. While these games weren't really developed by internal teams within Nintendo, they do show that the company is more actively looking into this direction.

It is very unlike Nintendo to try and tackle something they aren't known to be strong at, which is why I am willing to show leniency towards them when their first efforts don't measure up to the level of quality they are known for (aka Other M). Hopefully they are learning and improving.

The only problem I have with that is that only Other M and Mystery Case Files have made it here. (and I have no intention of ever playing MCF)

of course is gameplay first...if it wasnt like that Call Of Duty wouldnt sell over 30 million ^^

You and me both

Historically, what has been know as games didn't have any semblance of story they tried to tell.  There was the genre of pen and paper RPG, which did introduce this element.  But, the main thing about games is that they are something you play, which provide goals and challenges.  As the videogame industry has developed, the genre of interactive fiction has been fused with it, and now you have a decent number of people on sites like this who think that every single thing that is a game MUST have a story.  On top of that, the game will be judged increasingly by the same criterion that is used for books and film.  Nintendo has its roots, after doing card games, in the arcade.  And Donkey Kong, which they introduced, ended up started showing signs of there being able to be a story.  Pacman actually preceeded it with intermissions that tried to slip a bit of a story/cut scene that tried to add a bit of a storyline to it.

Then, when the arcades began to wane, and the NES came about, then there was an increase drive to come up with story-driven games, complete with dialog.  The NES helped to give way to a fusion of story with gameplay, to the modern form.  By the NES doing this, the end result was the computer version of electronic entertainment also fusing interactive fiction with more and more gameplay, so everything now played on electronic devices are called games, and the interactive electronic entertainment industry is now called the videogame industry.  

So, is Nintendo the masters of storytelling?  Nope.  But they do know how to make really good and fun videogames, rehashing the same backstory over and over again with Mario, and even Zelda for that matter.