Because graphics aren't why I play videogames, and by sticking to current gen tech, Nintendo is able to bring much need innovation to gaming.
If Nintendo went HD, dev costs would go up, therefore risk would rise, which would've resulted in conservatism, not just from Nintendo but also 3rd Parties. Nintendo has billions in the bank but, 'they can afford it', is a ridiculously simplistic view and doesn't take into consideration why videogame companies exist and why shareholders are so important.
Also, Nintendo wanted to take market share away from Sony, and MS, so having comparable dev costs to 360 and PS3, and an innovative controller, would've killed 3rd Party support, which every console needs. Bigger user base means more profit for 3rd Parties, more profit means more investment and more investment mean more good games.
I expect a lot more from gaming and, for me, Nintendo is delivering in a far more satisfying way than 360 or PS3 is.