The machine the OP describes sounds like the next generation Wii, which is likely about as soon as we'll see HD support, etc.
In fact, from this point forward, I think you can expect that most of Nintendo's future hardware updates will shatter the notion of formal, clearly-defined, console generations. Instead we'll see numerous, gradual, upgrades to the Wii brand a la GBA-->GBA SP and DS-->DS Lite, including DVD support (though I suspect this might be permanently MIA and/or coming via WiiWare), video upscaling, internal storage increases, and other, relatively minor, upgrades that have little-to-no impact on compatibility, brand perception/consumer confusion and, most importantly, price (and jibes nicely with Iwata's suggestion that the Wii might never see an official price drop).
As for any sort of dramatic update--defined here as any upgrade that requires conscious effort on the part of software makers to implement-- these would come at very, very infrequent intervals far exceeding the typical five year console lifespan. Things that fit into this category would be faster rendering ("more effects" in the OP's parlance), better audio format support, substanial Wii-mote functionality upgrades, etc.
I can't say I'm thrilled about this last prediction (as much as I love the Wii, I think we can all admit that we'd prefer better graphics/sound) but I think it makes a lot of sense when you look at how Nintendo is evolving their brand to encompass a much, much wider audience, far beyond what Sony has managed to do with the PlayStation brand (if they managed to expand it all, at least in NA and Japan).