But with the increased power, it can be used for far more than just increased graphics. CPU power is holding the DS back not just graphically, but in multi player, online capabilities and non-gaming applications.
if Nintendo also goes with a kindle-ish setup, that also gives them access to the cell towers, which means the next DS could also have software to use it like a cellphone(I'd imagine with a wireless headset) and maybe even at the same time as playing a game, online multi or on the solo.
But as far as the DS' graphical prowess, it should atleast be on par with a GC (or a Wii depending on who you ask) which is a nice bump higher than the PSP. If Nintendo doesn't neuter the Tegra (like I'm sure many expect them to) it should be somewhere between a GC and Wii in graphical ability with the added benefit of being on a much smaller screen.