Which part?

Yeah but if you remove the disc drive then you lose backward compatibility.  That wouldn't go over well.  Personally I wouldn't have a problem with it... but backward compatibility tends to be a big deal during the first few years of new consoles when original games are in short supply.

Well, almost everything... All I understand is that all the parts are really really small - smaller than most would have expected. But I don't know what that will mean for the games... Is it good? Is it bad? That part

This guy comment explains it well:

"And here's where we stray into somewhat controversial territory, as it appears that the tri-core IBM CPU has less in common with the POWER7 "Watson" architecture we were promised, with plausible rumours suggesting a multi-core evolution of the same CPU found in the original Wii - and by extension, the 2001 vintage GameCube. If there's one thing that's rather striking about Nintendo's Wii U teardown it's the minuscule die area occupied by the CPU in relation to the relatively massive GPU from AMD."

The implication being, of course, that the CPU is definitely the upgraded Broadway chip, and therefore somewhat rubbishy and below par compared to what's already out there. Let's examine that implication from a couple of angles. It's not quite the selective reporting of the Wii U as an underpowered machine we so often see, but it's close to that.

Let's start with that "plausible" Broadway rumour. You can't just take 3 single core In-Order-Execution chips and slap 3 together and make it a triple core Out-Of-Order Execution CPU. However, IBM ensures the Power ISA is always backwards compatible such that a newer PowerPC or even Power CPU can run code designed for a much older generation of CPU. Think how all modern x86 CPU's can still run programs from a decade ago. And as the article states, Nintendo's programmers have found an easy way for Wii backwards compatibility in the new chipset:

"There were times when you would usually just incorporate both the Wii U and Wii circuits, like 1+1. But instead of just adding like that, they adjusted the new parts added to Wii U so they could be used for Wii as well."

Further, IBM had no plans to reduce the older PowerPC chips (like Broadway) to anything below 90 nm. Ever wonder why Broadway was never given a die shrink? The chips on display are clearly 45nm, a size Broadway, modified or not, never has and never will reach.

Then we should consider the GameCube, a machine people like to forget about when talking about how Nintendo build hardware. A machine more powerful (twice the processing power at least) than the PS2, more energy efficient than any of its contemporaries, cheaper to build from launch than any of its contemporaries, more reliable than the PS2, pushed into a box half the size of the original PS2 model and a quarter the size of an Xbox, AND sold at a profit. So there you have it. An energy efficient, reliable, powerful machine in a small case at an affordable price. That's not to say Wii U will compete technologically with the next MS/Sony consoles, but Wii U's design has more in common with GameCube than Wii. As the GC was a step up from PS2/Dreamcast, Wii U is a step up from 360/PS3. It remains to be seen whether the gap with its future competitors is GC to Xbox territory, or something larger. I'd wager it won't be the Wii to PS3 performance chasm, though--that kind of bleeding edge console design is not viable, particularly from Sony's standpoint.

"It looks like an elegant design - something very, very different from the current generation consoles from Sony and Microsoft - and somewhat minimalistic too."

This should be emphasised more. Xbox360 and PS3 were the first multi-core processor consoles designed to power HD gaming, pushed onto market before the technology was particularly well-developed or efficient. Hence the enormous boxes the tech required, the hardware failures and the early development difficulties. Wii U's elegant design is a sign of a machine that while not cutting edge technologically, it IS a capable, energy efficient step up from what's already on the market. Let's not forget the GameCube, let's not buy into implausible rumours because they suit an 'under-powered Nintendo hardware' narrative, and let's try a little harder to present a more objective view of this device. There's enough tech there to provide new experiences in a reliable, energy efficient box, and I'd wager there's plenty of room to move on price in future, should Nintendo need to.

Oh, it has nothing to do with graphics but with efficiency, lifespan of the console and cost. Chech the link to the digital foundry analysis and you'll understand some of the decisions.

Looking just a GFLOPS, the Xenos pushed 240 GFLOPS while the Radeon HD 7690M XT pushes 696 GFLOPS, which would be (almost) 3 times as powerful; but still in the range that everyone was (realistically) expecting.

If they used a GPU like this I think it would be a very solid strategy ... When the "XBox 720" and PS4 release the best they could (probably) realistically do as far as GPU performance is in the 2 TFLOPs performance range (roughly 3 times this GPU); anything more than that would result in a system that was (probably) too expensive and produced too much heat. With diminishing returns on graphics technology, even though the Wii U would be much less powerful, this would likely translate into a graphical difference similar to the PS2 to XBox rather than the Wii to HD consoles.

Certainly, it is possible that Sony and Microsoft could produce more powerful systems but I that would require them finding a way to take a GPU from a 175+ watt graphics card and make it work in a tiny console; and I think that is unlikely to happen.

Nah. No way then. I must have mistook it for something else. Efficiency per watt of current transistor manufactuing methods doesn't come even close to that. A crude way of measuring how powerful a hardware will be but still. We're looking at 400-450 GFLOPS tops. 

I've said these exact words (almost so exact that it's creepy) a few weeks ago.

Couldn't they just sell that as an external USB disk drive?

Bad idea.  May as well keep it built in.

Besides, we have no idea how many layers the Wii U game discs could be.  It may be up to 3 layers deep.  Don't think I want to see the price tag on a 75 GB SD card based game.