I have a great reason why they should go to HD and why they should have in the first place.
My Wii looks like shit on my 47" HDTV even with the 480 Component cables. but it looks fine on my ghetto 20" CRT tv. now my self like to actually use my nice things, for example play a game on my nice large tv in the master room in my house. Apparently Nintendo developers don't share the same feelings i do. Oh yah did i mention we are in the 21st century? that could be another reason Nintendo needs to make sure they are moving forward at an attractive pace or they will eventually get left behind.
With that said, the wii has done great thats for sure. but i don't think Nintendo could pull off building such a basic console (hardware wise) next round of console wars, or its going to spell disaster for them.