I definitely agree that "first place" does not automatically equate to "did everything right and understands the market perfectly." But I think we have considerable additional evidence to suggest that Nintendo is, in fact, right in this regard.
If the Wii were the only graphically/technically weak platform to do well recently, it may be an outlier. Instead, we also have the DS (obviously), early gen iPhones, Android phones, and Facebook games, all platforms which rely on or which exclusively provided games with inferior graphical and technical capabilities -- and all of which, save Android, are individually more popular than either the PS3 or 360.
This certainly suggests that graphics/presentation/superficial concerns really aren't very significant for most people. For "core gamers," yes, but not for most gamers. However, this same body of evidence does suggest an area where Nintendo really did miscalculate: online and network functionality. Where Facebook/iPhone/Android games may be graphically inferior, they are some of the most online focused games in the world, often being available exclusively through DD and also frequently very social / multiplayer in nature.
That is an area where one could reasonably suggest Nintendo made a mistake, despite being "first place" this generation.