The next generation of Nintendo might be the first runner in the next cycle. X360 and P(o)S3 will extended well into 2012. I could see Nintendo getting a jump late 2011 with their next console - a true HD set. It'll be fully backwards compatible and have better controls and maybe a new controller device... I'm hoping or some sort of "real" Power Glove that uses your fingers.
Bottom line, its gameplay that rules the day. Nintendo has focused on the group gaming idea, the party machine. FPS are a dime a dozen - shooting Nazi, Aliens, Zombies, Commandos etc. If you've played one, you've play a dozen. Nintendo shines when it has different types of games. Mario Kart is different than Mario Galaxy is different from Mario Party.
If the only games that I played were FPS, yes then I'd want high graphic quality and details running at 1080p... but come on, there are more than just FPS games.