Exactly MooseMan, you've hit the nail on the head.
Nintendo is going to do just fine because they focus on what matters, games, game play and innovation and that's why despite the other companies focus on 'bigger and faster,' there will always be a niche for Nintendo in the market.
I am certainly intrigued by the rumors floating around about Nintendo's new console even more so (like you pointed out) than the rumors surrounding the PS3 and the 360. Nintendo has a reputation for off the wall stuff. Some good; some bad. But don't think for a minute that a failure is going to wipe Nintendo out for good. It hasn't yet.
Oh, and Fremen, last I've read it's an '06 release.
Edit: I forgot to add...
According to the latest issue of Gamepro, Nintendo has partnered with GameSpy (for what the magazine doesn't say) and has built in Wi-Fi.
In a quick search on-line, I haven't seen anything to either refute or verify it, so take it how you will.