Being that Zack and Wiki was low budget for a Wii game I can't imagine that it would require that high of sales to break even or turn a profit. I think the real important thing is whether Capcom is happy with the sales ...

Historically, new IPs perform relatively poorly and even worse when they're in a new or unusual genre. Companies that have been successful with introducing new IPs are either remarkably lucky or persistent; if you look at successful series you will see that quite a few ended up having break out success with their second or third game in the series.

Without having access to the manual (I'm not at home at the moment), I'd bet the team was no smaller than 20 people. There would be a significant number of artists, at least a writer or two, engine devs, gameplay devs, sound devs and composers, several puzzle/level designers, etc.

A lot more than you think goes into a game like that, especially when it comes out so polished. There must be people with expertise in many different areas to make something as nice as Zack & Wiki. Although it wouldn't take *nearly* as long as, say, SMG or Halo 3.

We should be grateful that Nintendo had the foresight to understand that the video game market needed to expand before development costs rose significantly.  We're still getting new and interesting intellectual properties on the Wii, like Zack & Wiki, whereas the PS3 and 360 retail releases will be almost entirely composed of sequels which are more likely to make money.

Mario Strikers was 30 person development team and is racking in huge profits despite having relatively shallow but long legs (sells consistantly each week but a relatively low number). I doubt Z&W was a bigger team so it's guaranteed to be profitable by now, especially with Europe still to launch.
I sure hope it'll be a series. It'll gain a very die-hard loyal following.

There's an explanation of where the rumors came from here: http://www.videogamer.com/news/10-12-2007-7067.html

Its creator also talks about "if we make a sequel" on IGN: http://uk.wii.ign.com/articles/822/822000p1.html