"Why don't they use the latest GPU available for PCs!" Because this isn't a PC, it's a console Don't like it, stick to PC. Nintendo isn't going to make a $600+ system. More recent hardware increases the price tag, and they want to sell it as cheap as possible. Their priority is trying to innovate with things like the controller or rumored projector, not to be a media player or graphics engine. You may not like it, but it works for them and makes them money.
They don't need to do anything over 1080p, consoles are made to play on TVs. Even doing 3D would be a stretch, considering they decided not to go HD with the Wii in a time when HD was as common as 3D is now.
And as far as "kiddie games", it's usually only the kiddies that are concerned with trying to get M rated games so they can look cool. Plenty of adults with 6 figure salaries come home to play Mario and Pokemon. If that doesn't satisfy you, then read the article on how Rockstar is interested in the new Nintendo system. Oh, and this is also the company that brought out Conker's Bad Fur Day, Perfect Dark, and No More Heroes.