Smaller loss than least year is a step in the right direction, hopefully Nintendo can get back to making profit as soon as possible.
Concerning Iwata, it's a tough one, and I can see why some people would want him out. He's made some big mistakes, there's no denying that. Personally, I don't feel like now would be the right time to axe him though, the Wii U is already out and Nintendo have no choice but to try and support it as best they can. If they still can't manage to get it to respectable numbers in a few years (Say, N64 level), then that would be the time to bring someone new in for their next home system IMO, kinda like how Iwata became CEO in the first place during the GC era.
Iwata's shown that he at least understands the market, even if he's had trouble transforming that understanding into sales, especially with the Wii U. The 3DS started very slow, but he's managed to turn it around very well and it's well on its way to having one hell of a library so that's a plus (Although it's also a minus for the start it had lol). He just better hope he can do the same with the Wii U.
And to that dude who said putting Pokemon on iOS as well as the 3DS would be a good idea. You're insane. Pokemon IS the handheld system seller. To put it on a iOS device is practically burning money, both from software ($40 iOS game? Wouldn't go down well) as well as the loss of hardware sales that Pokemon would bring in. iOS has no value for Nintendo as a game platform, Mario Kart DS made more money for Nintendo than the whole of iOS did in a year. One game. I think Iwata's got the right idea in trying to put things like Miiverse and the eShop on iOS rather than full on games.