Nintendo has released excellent A+ quality games in every generation, whether they were the market leader or not. I think we can all agree on that, so I'm not sure how much effect their market share had on influencing the quality of games. Maybe it helped, maybe it hurt. Its really just a matter of opinion, but like I said every generation had at least some A+ material.
In the NES years you had the original SMB games, Zelda, Metroid, etc. In the SNES years you had Mario World, Zelda, Super Metroid, DKC, Mario Kart, Star Fox, etc. In the N64 - present there was all sorts of excellent titles as well.
But in this current Wii generation I think a lot of gamers are disappointed. The A+ titles are definitely there, but they are drowned out by the shitty casual non-gamer crap from both Nintendo themselves and the 3rd parties. The Gems are there, but they're harder to notice because of the tons of manure piled over them...
But you can't say its because of Nintendo being #1, because Nintendo was #1 in the NES and SNES years and we didn't have the casual shovelware then like we do today. So Nintendo being successful isn't the reason, imho. I just think the problem has to do with their focus.