Nintendo hit the perfect storm this generation. They went with standard def (when hdtv rates were low) and kept their price very affordable. They also released a new control scheme and everyone wanted to see what it was all about thus pushing more more sales to them. Take away those two benefits and you have the Gamecube situation all over.
Nintendo makes money always, they did during the Gamecube era. The Wii has poor third party support, and Sony and Microsoft are coming to the plate with their own unique control schemes. Will they be better? Who knows, but the benefit that they had for the Wii that is a strong unknown. HD adoption has also skyrocketted so I don't think the Wii can afford to go super cheap on hardware again.
However, they have another unique situation. Both Sony and Microsoft lost a ton of money this gen bleeding each other dry. As such, I think they are actually just planning on releasing "Natal" and "Wand" instead of releasing a new console. Neither of their adoption rates are out of this world so it is concievable, that if they can keep the market excited, they could sell for 10 years. Nintendo, however, is quickly reaching market saturation. Can they sell more than the PS2? Bottom line is who cares. Most PS2s were sold for less than $150. The Wii isn't at that price point and won't be for a while if it does hit it so Nintendo shouldn't be concerned about reaching the lower end of the market which are less likely to pay full price for games anyway. Nintendo shouldn't give up on the Wii. They should give it good gaming support for the next 2 years. Then they should release a new console and they could dominate the market again. They will have the "new" console, they can include features that the PS3/Xbox360 didn't include because they weren't cost effective at the time, and they can start from 0 again and sell rediculous amounts of them.
This also allows Nintendo to keep the premium brand that they have been trying to do. I've never liked it, but Nintendo doesn't have a player's choice title, they haven't dropped their price on any games, they didn't want to lower the price of Wii because it stops people from becoming early adopters because they are always waiting for the next price drop. Same reason they shouldn't release a different version of the Wii with new features. It leaves the consumer always on the fence wondering if a better deal is coming. They want you to think this is the best deal now, so don't wait, buy it.