It bears repeating.
NES (1983) ≈ Master System (1985, was a bit better than NES)
SNES (1990) ≥ Genesis/Mega Drive (1988)
N64 (1996) ≥ PSX/Saturn (1994,1995)
PS2 (2000) ≤ GameCube (2001) ≤ Xbox (also 2001 and cost $100 more than Cube)
Wii (2006) < Xbox 360 (2005) ≈ PS3 (2006)
Long and short of it is: with the singular exception of the Wii, whenever Nintendo has been late to release in a generation, their hardware is comparable to or better than the competition. Whenever they've been early (Famicom/NES), they were not royally outclassed by the competition until the next generation began.
The Wii was a gamble that bucked previous Nintendo trends and it paid off for several years. The question is--is this the approach they will take again? Hopefully the 3rd party influence they're supposedly listening to tells them not to be too tight on the wallet strings for the horsepower.
EDIT: DCKing: The 3DS may not be "cutting edge" from a raw specs perspective but you can practically count on one hand the number of commercial devices using an autostereoscopic screen.
Your comparison marks there are questionable...
NES/SMS: The SMS is more powerful than the NES. Sure, the difference is not huge, but the SMS clearly has better graphics. The only advantage the NES has is better audio, but with the (Japan-only) FM sound addon the SMS catches up. Of course though, the SMS also is 2 1/2 years newer.
SNES: While weaker than the Neo-Geo, the SNES is more powerful than the Genesis and Turbografx. The only advantage the other systems have CPU speed (both have a CPU clock speed twice that of the SNES), but the SNES is ahead in everything else, and the SNES could have addon chips to help with the CPU speed issue. It's clear which is more powerful overall. Of course, a Genesis plus 32X probably does beat the SNES, but that's an addon, and a late addon too (released in 1994, after several next-gen consoles...).
N64: The N64 is more powerful than Playstation or Saturn, no "≥" about it. It's got more RAM, a three times faster CPU, more hardware effects, etc, etc. It's not close.
GC: Yes, weaker than Xbox but above PS2, but the GC is a lot closer to the Xbox than the PS2 or Dreamcast are to either of them, which is worth noting.
Nintendo has never had the most powerful handheld in any generation. They make the one they feel meets the middle of the road for performance and price. I think the Game Gear and everything else onwards (and some of the 3DS misstep) showed that people care about games, not specs in that market.
Well, sort of. Nintendo handhelds are usually the most powerful at the time of their release, but then get exceeded not long after and ed up as one of the weaker systems of the generation, but easily win anyway because of the great games they have. It is indeed a good case of how games matter more than hardware.
But yeah, the Game Boy was the most powerful handheld at the time of its release, because it was the first new handheld since the Microvision... but yeah, as soon as another one came out (the Atari Lynx, later in the same year as the GB, '89 -- and given that the Lynx has hardware scaling and rotation, you could argue it's more powerful than the GG too...), Nintendo fell behind. This pattern has repeated -- you could perhaps argue that the GBC was more powerful than the Wonderswan or Neo Geo Pocket because it had color (even if otherwise it was probably weaker), but both had color within six to nine months too.
The GBA is the closest Nintendo has to a most powerful handheld, because it didn't have much strong competition and released a few years ahead of more powerful competition. I don't know offhand if the N-Gage is more powerful than GBA or not (it probably is, yes?), but that was several years later. The only other "competition" was the Wonderswan Color, a last-gen system, and some very shortlived systems (that were more powerful than the GBA but no one bought). Then the DS was released just slightly ahead of the PSP, and the 3DS longer ahead of the Vita.
However, you are absolutely correct of course the Nintendo always aims for a perfect balance of price, performance, and before the 3DS, battery life, with their handhelds. Those factors, and the great game libraries, explain their success over many more powerful systems.