Are we brainstorming a possible remake of the Wii (ala DS Lite and PS2 slim), or a completely new console? I'll just do both then. =P
A Wii Lite would probably include more flash memory, better wiimote speakers, and maybe some improvements to the general ergonomics/looks of the thing. It shouldn't include any features that would make the games play for the new version unplayable, or significantly reduced in quality, on the old.
An obvious improvement would be a more sensible sensor bar (har har). Detached ones that run on batteries for 6 months, rechargable ones that need to be plugged in every 10 hours, fluorescent stickers that have to be replaced every few months etc. Almost anything would be better than having one more wire hanging around.
Oh, and I would also really, really, REALLY appreciate being able to use the internal memory for GC game saves. Apparently the problem is how the GC hardware in the Wii are so authentic that they are utterly unable to interact with the Wii hardware. This shouldn't be too hard to do, and they could just bite the bullet bill and include a 20MB memory card in every console. This is 2007 and I still have to mess around with memory card! Feels as archaic as having to tweak autoexec.bat and config.sys to get PC games to run. -__-*
(this would also probably be the only new feature that would make buying the new version worth it without pissing off a lot of people)
Nintendo's next entirely new console will definitely be more powerful than the current HD consoles IMO. Probably output HD as well, unless something truly unpredictable happens to the HD market. I remember some suits pretty high up in Nintendo say they would definitely adopt it by the time it becomes the standard, which is probaby just in time for next gen.
Doing a higher resolution would, taking into account the gradual but slow increase in game size, probably justify a larger disc format. This could be Blu-ray if it becomes financially plausible to include in a gaming machine during the next five years (not at all certain), but could also be some 20ish GB gaming-only format to avoid licensing fees. I've also played around with the idea of using flash cartridges due to their rapidly decreasing cost, but my technologically savier friends tell me that's just stupid. =P
I honestly have no idea what kind of a controller it would use. I would probably be a bit disappointed if they did the exact same wiimote+nunchuck thing, but might well be that none of us would want anything else when the time comes. 3rd party developers haven't really even started exploring the different things the wiimote can do, and the options for the expansion port (the one the nunchuck wire goes in) are downright limitless.