You guys just don't understand. Wiiware and DSiWare both generate very low sales volumes. Many of the games there would have generated more revenue as low budget retail games, but doing so requires securing a deal with a publisher and that's out of reach for many devs.
Retail games make money upfront when are sold to stores while digital does it over time as it's sold to customers. Publishers also often pay advance on small retail projects, while DD developers need to fund themselves. If you're really small, the advance can be a lifesaver.
Also, a retail release doesn't prevent a digital release later, on the eShop or on another platform. Again, if the studio is small the publisher's advance can keep the company going for long enough so they can work on ports.
You bet many XBLA/PSN devs would have loved to get a retail publishing deal, even with all the drawbacks involved.