What about the code name? I know not much can be gleamed from it truly, but I mean, it's called Cafe, a social store, in a social world, by a company that obviously wants to get into the social market, or at the very least, get back the kind of 'gamers' it's lost to the social market. I think the name has a lot of implications for the world we live in. Coupled with Nintendo reaching out to other companies, I think it's more true, because what do other gaming companies want most beside an answer to, or a replication, of the kind of success that social games have.
I still say the controller will be made to be taken with you and might even be the console itself, and the minuscule home server serves as additional storage (possibly your own personal cloud), and the means of broadcast to a TV. This set-up would also aid the randomly joining a mulitplayer game because, if you were at an Internet Cafe or Starbucks, and someone is playing Mario Kart, and you've just finished getting your ass kicked in Mortal Kombat, you could just quick join their game.
With Japan moving more towards mobile gaming, I see this as more of a possibility, because of Nintendo's willingness to (and success for) following Japanese trends. The home server would be compatible with the 3DS, and then people with a 3DS can join in on mutual games for the two systems (at home or at a cafe, at a library, on a bus, at lunch, etc.) and further expand the social aspect of the system. The 3DS controller also encourages sales of the 3DS along with the Cafe, and includes more people in the social experience.
With cloud based gaming, and all this talk of Stream, I think portable gaming console makes a lot of sense, and I actually thought it was what they were going to do with the 3DS, but I guess a $250 controller is asking a bit much of people. A $100 controller with only one screen, 32GB of storage, and new CPU/GPU, really isn't absurd, considering how cheap LCD screens are, and the competition between mobile processor manufacturers competing for the kind of business a new, social, Nintendo product would bring them. Even if sold at a loss, the potential for such a system would be huge, and the Nintendo faithful, as well as the phase crazed tweens, would snap these things up, and buy enough games to make up for the loss, in classic Nintendo fashion.
When you look at the quality of games Nintendo is looking to display on the 3DS, and Sony's boasts of the PSP2's power, I really think it's time for Nintendo to go mobile with their 'home' console, and bring back the Game Boy name!! It could be called the Game Boy Tablet or GBT for short, which is pretty catchy, and could easily be turned into a rap by a somewhat dorky looking guy standing next to a kind of cute chick in a pink dress... wait a minute.
Maybe it could even have a phone, which would be further proof of Nintendo reaching out to other companies.