I have absolutely no problem with a console that just plays games. Indeed, I say "good for them" in this decision, especially if it actually lowers end cost to consumers.
The problem with the Wii was never that it didn't play DVDs. The problem was that its catalog of games was lousy. Seriously, look at which games are still selling at full price, and which dropped like a rock two weeks after release. Hint: Twilight Princess is still one of the top-selling Wii games... and it was a GameCube game. They won't get anywhere without developer support.
Okay, I will admit, they rewrote the book on hype and mass-marketing, this generation. That, combined with actually making a profit on hardware sales, put them solidly in the black. I'm not sure the "Nintendo iPad" will manage the same feat, though. That controller is going to cost a pretty penny.