Everyone doubts Nintendo with graphics, and yet EVERY generation they top out with some of the best visually looking games each gen, due in part to harder work and innovation. They know what they're doing, and I've never been worried.
I know the graphics will be better. Consider a few things:
1. GC and past Nintendo consoles never pictured well. They just weren't photogenic screens. Play the games, and it's a different story. Yet, look at the screens of TP from more recently... they beautiful and really heavy in depth and rich in color. And that's from GC's developer kits? Will will be fine.
2. They're pushing the innovative gameplay as much as they can, and they've won a huge battle there alone. The gameplay will be more important than graphics, and even though every true gamer claims to agree, they all need prettier pictures to get their rocks off in ecstacy.
3. Satoru Iwata said himself (as well as Reggie and others) that the system will be able to compete
visually with the others on the market (sans HD support) and will justify the newer gameplay options. They even said that it'll take a few years to tap out the potential of the Wii, and graphically, it'll be easier and cheaper to produce high quality work by developers with a good vision. No one will maximize their system more than Nintendo, but thankfully, they'll have some of the best games.
4. Nintendo is very, very modest... and very, very realistic. Whilst everyone else was boasting that their system could put man on the moon and cure cancer, Nintendo said what they've basically said every gen: 2 to 3 times more powerful. Too bad for the competition, power isn't everything, even when it comes to graphics. Nintendo places emphasis on what's important.... they only give graphics the credit it deserves, and they know (despite it being important to their market) that visuals aren't everything. However, them releasing a statement that the graphics are better than what we've seen so far will be a classic case of trickery to make the final product look better than expected. They know their opponents trump card is visuals. Beat them at another game (namely gameplay) and then show you can stand quite well in the challenge of grapics, and you've got a winner.