I highly doubt that this handheld console would be able to handle the GPU and CPU extensive games of this generation. Even an Intel Atom processor can't handle these next gen games, and it is about the size, if not a bit bigger, of these portable consoles. A PS3 has a 3.2GHz cell-processor, and I refuse to believe that they could put that on a device that's supposed to fit in your pocket. I wouldn't even think about putting the tri-core proc and the Xenos from the 360 in a tiny little case without fans; the 360 gets insanely hot with fans!
I can imagine that they'll come up with some new revolutionary gear that isn't like most stuff on the market today. I mean, the 360 and the PS3 are a few years old now and I would think Nintendo isn't sitting around picking their noses and stuff...