It doesn't increase development costs, at all. Vigil Entertainment (the Darksiders guys) said it took them almost no time at all to get the code for the gamepad operable.

"Absolutely need" is a different issue, but games that use the Gamepad in meaningful ways include...

Pikmin 3
NintendoLand
New Super Mario Bros U
Wii Fit U
Wii Sports Club Golf
Game & Wario
Wii Party U
Wonderful 101
ZombiU
Rayman Legends

Note that this isn't a comprehensive list. It's a listing of games I can think of off the top of my head.

This.

I've grown to love the gamepad. I still think it could use a physical redesign, but functionality wise, it's amazing. No more "Just let me get to a save point" when the girlfriend wants to watch some TV, It's comfortable to hold, and I use the universal remote function many times every single day.

The Wii was tailor made for the non-gaming. Simplistic movement without overcomplicating the process of gaming leading to more people being interested in at least trying out the process. The touch pad requires thought demands at least median understanding of how to use a standard gaming controller. This overcomplicates the process to the gamer and thus is the exact opposite.

In conclusion, the controller was made to attract core gamers to a world built for casuals so they could live in harmony. It will attract core gamers but will force casuals to shy away, which brings Nintendo back to typical Nintendo sales numbers pre-Wii. 

P.S.

The tablet is just a glorified inventory box for games.

Sorry I should have been clearer. I was referring to production costs for the console.

Well then you missed the ENTIRE point of what I was saying. I'm not arguing the gamepad is useless. I'm arguing that there is a disconnect between hardware and software philosophies.

Nintendo's overall sales have always been based on innovation.

DS - Most Innovative thing ever (Led to our Smartphone/Tablet World) - 159 m.
Gameboy - Most Innovative thing ever seen at the time(1st Handheld) - 118 m.
Wii - Same (Motion Controls) - 101 m.
GBA - Just a Graphic Upgrade / More Buttons - 81 m.
NES - 1st console to introduce true home console games/not ports - 62. m
SNES - Graphic Upgrade / More Buttons - 49 m.
3DS - 1st ever 3D without Glasses - 40 m.
N64 - Graphic Upgrade / Analog Stick/More Buttons - 33 m.
GC - Just a Graphic Upgrade with a redesigned controller - 21.5 m.

The Wii U in my opinion is not as innovative as the NES,DS,Gameboy, or Wii but is certainly more innovative then the SNES (not that I dont love it), N64 or Gamecube, and I think lifetime sales are going to fall somewhere in the middle at 65 - 70 million. The games matter in terms of software sales, which are actually more important in terms of profits, but in terms of pure consoles sold its all about innovation. All 3 consoles last gen offered something innovative (PS3 / Bluray, 360 / Best Online Servives) and all 3 sold very well. I just dont see it from Xbone and PS4 this gen. They are just graphic upgrades, with updated controllers, and updated online services. If history is any indication they are going to sell less then 80 million each (less then their predecessors) and I would'nt be shocked if one pulled a Gamecube and really bombed.

I wanted to stop reading after that too.  Because Nintendo Wii U GamePad has been the single greatest success For Me in MY life.  But i did't top reading... and all i can say is I wish i had.  I'm happy with Iwata's decisions as they affect me.  I don't want Yoshi's fruit cart touch games.  The Nintendo Wii U GamePad serves it's purpose perfectly.  Hardware and software are in harmony.

I do agree that Nintendo needs some more stuff to show off the gamepad, but there were alot of games on the Wii that did'nt use motion controls for anything other than being short on buttons.  Donkey Kong,Brawl,NSMB,Twilight Princess and both Kirbys were all pretty standard games, in terms of how they were played.   Wii U does'nt have a Wii Sports going for it yet though.  I thought some of the stuff in Wii Party U and NintendoLand did a great job at showcasing the gamepad, but I would like to see a really big title integrate it in a big way.

You're right and I think games like Wonderful 101, Wind Waker HD and Pikmin 3 are great to have to bulk up the library. Not every game has to justify the Gamepad.

But when such a huge amount of R&D goes into putting it there and it increases cost for the consumer and looks so daunting to the wider market, there HAS to be a range of software there to justify it. Nintendoland is a good start but that game was 12 months ago. Was that game and a map/inventory on other games really worth the cost of having it?