Nintendo always said that the graphics on the Wii were never going to be up there with PS3 but were going more for the playability side which they have done very well. The Wii2 or whatever it will be is supposed to have a major upgrade with graphics.
In fairness to the current models out there, which are now couple of years old, they are doing very well and at the time of release where a major step forward. Millions of consoles sold and still selling.
To create a super machine if you like would be a disaster for retail and wholesale as the price tag would completely keep it out of reach of the everyday person. At present prices could not go any higher, 40 - 50 Euro for new game is a push for anyones budget.