Nintendo under Yamauchi was pretty arrogant, and that's what pissed off a lot of 3rd parties and so forth.
To give Yamauchi credit where due (shockingly), his controlling ways kept them from being like Sega during that era. On the minus side, wasn't he one of the people that tried to force Miyamoto to make Yoshi's Island look like Donkey Kong Country?
I know he is responsible for ruining Star Fox adventures (and the Star Fox franchise itself by extension). The game was supposed to have been a new franchise called Dinosaur Planet or something like that, but Yamauchi stepped in at the last minute and made it Star Fox instead. I'm sure he was responsible for other crap like that in other games and other decisions surrounding the GC in its first year or two, and even though he left before the end of the GC era was over I think the damage was pretty much done and his successors couldn't do much to salvage the system so all they could do is wait until the next gen and start fresh with the Wii.
But even so, Yamauchi is responsible for Nintendo's success in the first place. I just think that since he is in his 80s now he is probably suffering from senility which happens to a lot of elderly people and is nothing to be ashamed of. In the NES era he was probably in his 50s or so, and back then he was probably fine, but as he aged the quality of his decision making began to deteriorate.
Again, its nothing to be ashamed of because that's what happens when you get into your 70s and 80s. That's why a lot of people were against McCain being president, actually...