There is some serious delusion on the part of some Nintendo fans on how well this system is really going to be able to compete in the graphics department. I personally don't think it matters - Nintendo has obviously staked the system on the controller and Virtual Console, not the graphics. Whether that's a mistake or not, we shall see...
If Wii developers know they can't match graphically, companies will be forced to spend their budget improving gameplay, which, quite frankly, was the reason we all began to play games in the first place. Wii is looking to do something completely knew, and in the console world, that's a
big deal.