I have been arguing for the lowest price possible for the Wii. I have stated numerous times that I think Nintendo should charge as low a price as possible and still make a slight profit.
That being said, $99 is a bit too low for me. I don't think it would hurt the DS sales, because I think people have come to expect a simple fact: portable is more expensive the home always. Just look at DVD players, Computers, handheld gaming systems (PSP/compared to PS2 and DS/compared to Gamecube.)
If Nintendo can in fact sell this system for $99 and make a profit or a slight loss. It would be better marketing to include 2 controllers and Wii Sports for $150-175...possible at most $199.
The reasoning for this is simple: impulse buys. It is easier to get a non-gamer to buy a single package and get basically everything he would need to play. One game, One extra Controller, and the system. A nice little package that supplies everything you need, at a reasonable price. Looking at both Xbox 360 and PS3, spending $299-599 on a console, and still needing to buy games and an extra controller is quite intimidating for a someone picking it up after playing one or two fun games.
The only problem with a Wii bundle is that it prevents the retail stores from creating their own bundles...bundles they make lots of money from. Though I suppose they can still throw in a SD Card, Another Extra Control, Some Virtual Console Games, and perhaps another game or not to bring the price to: $250-$300. Still that pushes the Wii way out of the price range retailers and even Nintendo wants their system.
Final note:
If Nintendo did sell the system for $99 I would have a whole extra $100 to buy accessories and games. Which means instead of spending the money on 1 or 2 games and a single extra controller. I would definately get 2 games perhaps 3, and 3-4 controllers. Nintendo would get the same amount of money from me, and actually be making more profit.