Yep, I agree Ian, and in fact the recent Miyamoto interview confirms it: at first Nintendo's next-gen strategy was all about timing and getting certain games out on a specific schedule. But then they started to consider whether or not gaming can remain the way it is for another 5-10 years.
There definitely was R&D for the Wii hardware, make no mistake. But all that went into making a very small console with no fan rather than a more powerful one. While Microsoft and Sony's behemoths experience various heating issues and require fancy cooling solutions (that don't work well enough in many cases), Nintendo's tiny machine doesn't even need a fan.
All of this is part of the plan to make a machine that is inobtrusive. It has to be able to fit anywhere without annoying anybody with noise, visual clutter, or wasted space. Those were the hardware requirements, not more power.