Just think, RV770 / HD 4870 is not even a highend GPU, it's upper midrange.
(R700 / HD 4870X2 using two RV770s forms the highend product for this year).
Imagine if Nintendo's next-gen console GPU can rival or even surpass RV770 at a much lower cost (given that it'll arrive in 2011 or 2012) on 32nm or 22nm. Nintendo could easily get basicly what would seem like a double generational leap from Wii, since Wii graphics are last-gen, at very low cost.
The next-gen Zelda (not the one being worked on now for Wii but a future Zelda for the next console), could easily look like lowend CG, probably even better that CG television commercial for GBC Ages/Seasons.
Of course games don't look as good as tech demos of the same time peroid/gen. However, games do end up looking better than previous-generation tech demos.