I think everyone's just overcomplicating this.
It seems to me that the economy should get almost all the blame. Nintendo expected people to run out and buy its consoles in droves each time a "big" game came out and they did just that years ago in the Clinton years when the economy was great but things have changed a lot since then. The economy is bad in the US and really bad in Japan.
People just want to buy "safe" systems like the PS2 and GBA. The PS2 because it has such a huge selection of games and is "trusted" and the GBA because it's so cheap. I actually think one of the GCN's biggest problems is that parents are buying GBAs for their kids instead of consoles for that exact reason.
Who knows. Maybe the economy will get better in coming years and Nintendo's consoles sales will go WAY up. Or maybe Bush will blow up the world and console sales won't matter anymore anyway. For now, Nintendo will just have to settle for making a massive ton of money as opposed to making a massive, MASSIVE ton of money while just about everyone else in the gaming industry is losing millions and facing possible death. How I pity Nintendo!