A few thoughts on why the Wii's processing power is so much lower than that of the PS3 and XBox 360:
1) Nintendo was not sure that the Wii was going to be a success, and (certainly) did not predict the Wii being as popular as it is; they were probably very worried that they would produce the next 'Virtaul Boy' and didn't want to spend that much money on R&D and didn't want to take any hardware losses on the units they did sell.
2) Nintendo understood that third parties would doubt how successful the Wii would be, and they didn't think any publishers would accept the risk of the Wii along with the risk of HD-games at the same time. Without the low development costs of the Wii it is unlikely that any of the third party games that have been released for the Wii would have ever been produced.
3) HDTV is still a luxury item which a minority of people around the world own. Nintendo has no reason to motivate people to buy HDTVs and it seems foolish for them to lose money up front (and to spend much more money on software development) on something that is not going to benefit the majority of gamers in this generation.
All of these factors will not be in place in the next generation so the next system will be more in line with what the competition would release at a similar point in time. This doesn't mean that Nintendo will attempt to produce a bleeding edge system afterall the Wii demonstrates that isn't necessary, and the diminishing returns on graphics' technology would make that a pointless pursuit. To expand upon why it is pointless is that the PS3 and XBox 360 can produce graphics that are rapidly approaching the quality of pre-rendered movies (in particular if you consider what would be possible if they focused only on 480p); in the next generation any improvement beyond (roughly) 4 times the power of the PS3 or XBox 360 will likely only be used to generate subtile effects which few people notice.