I personally think it was a good choice.

Latency, video game lag, and inaccurate motion sensing would be quite a nightmarish combination.

It was not until recently that motion sensing had advanced to highly accurate levels.

Nintendo turned down discs... how did that end again?

They didn't exactly turn down discs they had Sony develop a disc format for them with their disc based SNES the Playstation :P then Sony wanted all the royalties of the format every time a game was sold, Nintendo became wary of their deal with Sony and dropped them with an incomplete system, then proceeded to go back to a format they're experienced with, carts.

How did that end? Sony won that gen, Nintendo had IBM set up their format for the GC, and then updated it for the Wii...

they was very wise, Natal has too much lag and inaccuracy to even bother considering, not to mention the power it will need to track up to multiple parts of up to 4 people at a time, now wonder all the demonstrations look bad.
now take sony's motion control for example it has no lag and is a lot more accurate, all they need is a nunchuck device and they have a potential to get a lot of hardware sales, hype will not sell everything...

Iwata , never took a wrong decision , maybe the only was E3 conference 's scrip in 2007 besides that the man is RULEZ ...the game industry many may not know , but he come up with Smash Bros , and Brain games ... and the Wii and DS main concepts ....the fact is Iwata may not be the BEST game developers (Miyamoto still the king) but he is for sure the best COO in the world , and this is a fact as Ninendo was pick THE BEST COMPANY in the world and also makes more money per person than Microsoft and even google ...if it was a bad decision only time will tell ,its not about Natal' fails , its about VS sells... and what nintendo will come up with next ; )

At this time Iwata was not Nintendo president it was Yamauchi , that has took some very stupid decisions during Nintendo history ...

With Ms's history of taking software and making it profitable, Natal was a good call from them. Whether it becomes anything more than a gimick remains to be seen though. I think it will sell a hell of a lot of Units when released but as with eye toy, it will quickly become a gimick. As i said though, with Ms's history with software I wouldnt put money an that.

and they did very well, but i wish motion-plus was included from the begin and also nunchuk motion -plus....

They definitely did the right thing. Microsoft is dropping the chip for decoding camera data in order to keep costs under control. This would not be an acceptable option for Nintendo since the Wii is much less powerful than the 360.