I guess you play wii stretched on an HD right? I played RE4 on the HDTV stretched without component cables and it looked bad. but if you use component cables on Wii it look much much better
I use the official component cable for the Wii with it set at 480p. The image isn't stretched.
Ive played a 360 on my sis HDTV The games I played were Gears and Assasins Creed those games were praised for there graphics.
They looked nice but it doesnt make the wii look terrible.
If you can't see the graphical differences between Assassin's Creed and a game like Super Mario Galaxy, then I dunno what to say. Get your eyes tested maybe? Haha. J/K, but seriously, SMG looks alright but in no way does it compare to AC graphically.
More graphics processing power means higher resolution for a sharper image, decent anti-aliasing (a lot of Wii games are jaggie central including SMG), better use of lighting and shadow, and you can have more happening on screen at once which gives you more detailed character models and environments, a greater number of enemies etc. It all adds up to provide a better experience for the gamer and if it didn't matter, you'd still be playing games like Missile Command and Asteroids.