Sure it makes everything less competitive, but then again, Nintendo has never been big on promoting online competition.
Really the current achievement systems don't have much of a competitive aspect built in.
Like for Xbox, I'm quite proud of my achievement for beating Ninja Gaiden 2 on Master Ninja mode. I expect its extremely rare (based on the Giant Bomb system), but in the end its only worth the same points as some random 'achievement' you might get for creating a character or whatever in another game. There's nothing actually built in to tell you how rare or difficult your achievements are, and even distinguishing rewards like gamer pictures or avatar items seem to be largely phased out. So yeah...its there but doesn't mean much. Glancing at someone's gamerscore reveals little else than a glorified time played clock.
If someone comes up with a system that actually means something, and can be easily conveyed, I'm all for it. I feel that is unlikely because of the spirit of accessibility that these companies are operating under now. A system that requires people to actually achieve things to progress could alienate the target audience. Now that I think about it, its mildly surprising that there is not yet an option to just buy achievements.