Nintendo's ultimate problem with the Wii design is that the whole thing is a tradeoff. If they had Xbox 360 comparable hardware with the Wii remote they could say they have an advantage because their console can do more than the others. But the Wii CAN'T do more than the others, it is merely different.
Ultimate problem? Actually, this is really the only problem with the Wii. However, if Nintendo hadn't chosen this route, the Wii would almost certainly be no more successful than the GameCube was (marginally more successful at best). The only thing Nintendo could have done differently was made the console more powerful and eaten the cost themselves. They could have only eaten so much, so at best we'd have SD games with better shaders or Wii games as they are now in HD. I like to get things for free of course, and Nintendo might have eventually gotten a return on their investment, but then again they might not have.
I've come to the conclusion that the Wii's third party situation has no realistic hope of improving. Nintendo has just made a console that game developers are not interested in developing for. They are so uninterested that they will make shovelware for the Wii to finance the creation of the games they want to make on the other consoles. The waggle wand isn't good enough. The Wii is actually so unappealing to developers that they would rather risk financial ruin than focus on it. That's pretty idiotic since the Wii's hardware is perfectly capable of producing good games.
Funny, I had just come to the opposite conclusion. While the very best developers can guide the publishing decisions, most of the time it is the other way around. Now that the Wii is the unquestionable market leader, publishers will start forcing their developers to make Wii games. However, this newer batch of Wii games will actually have budget and so we'll start to see some surprise games of higher caliber.
The Wii seems to be designed specifically to discourage ambitious design. It's targetted at non-gamers with simplified non-games that are intentionally restrictive so as to not confuse or intimidate non-gamers.
Actually, the Wii is designed to require innovation and emphasize it over graphics. It's perfectly possible to develop real games (Zelda, Metroid, Galaxy etc.) if the market demands it.