Size does not equal power. Ever heard of Professor Frink? "I predict that within 100 years, computers will be twice as powerful, ten thousand times larger, and so expensive that only the five richest kings of Europe will own them."
To me, the design is not bad, but it is boring. Previous Nintendo consoles gave me the feeling that they wanted to be played with. Perhaps it was the whole "toyish" aspect of them. If I see a GameCube sitting around with power off, I feel like I should go turn it on and start playing. When I see a PS2 with power on, I feel like it's wasting electricity like my VCR or PC. That's not to knock on the games, either, there are a ton of games I'd love to play on the PS2. It just doesn't look like fun, and neither does this. The blue light is the only hint that there might be something fun to play with here.
Anyway, it doesn't matter in the big picture. This will go over much better than GameCube with the general public, which means it was a smart design choice, I just don't like it personally.