It's actually going to end up being a fairly ingenious move. The Wii was underpowered and built around a gimmick of limited interest (not saying it doesn't have good games, but most of those good games don't hinge on the motion controls of the Wii), but it sold like hotcakes despite not joining the current generation in graphics. Honestly, all Nintendo has to do at this E3 is parade around Zelda, Mario, Pikmin, and a few other games in high-definition–like they should have already done years ago--and they'll have the hype train in full gear again despite the capabilities or gimmicks of the Wii-U.
Not only that, but its not like HD was the standard in 2005/2006 like it is now. I don't know anyone who rushed out to get a 1080p TV for the asking prices at the time, let alone buy on just so they could play their XBOX. The Wii was gimped from the get-go to costs and MSRP as low as they could, it was all a fantastic move for business and consumers alike (maybe not so much for the "core gamers" but that's beating a dead horse).
Nintendo is more or less playing catch-up with the rest of the console manufacturers technology wise and they'll more than likely be able to catch up quickly when you consider that both Sony and Microsoft, have really been kind of wishy-washy as to what the next step in progress is going to be. Its doubtful that we'll ever see a big graphical leap like the degree of the Playstation 1 to Playstation 2, and the Kinect and Move, despite having a lot more untapped potential than we see now haven't been pushing the craze as far as motion controls go.
I guess maybe there's some space to work with or improve 3D, and even then Nintendo already has a good step in that direction with the glasses-free thing.