Iwata has himself said that they WILL spend a decent amount of money on game development but only for certain franchises like Zelda, there is absolutely no need for WiiU to be any more powerful than it is unless Nintendo wanted full third party support and 1) I don't think Nintendo are all that bothered by third party support outside of the big yearly selling franchises like CoD, Fifa, Madden, Just Dance, WWE ect and 2) there is no guarantee third parties would support a powerful Nintendo console as the Gamecube showed.
To sum up, Nintendo are doing the right thing hardware wise in my humble opinion and it will pay dividends the generation after PS4/XBO.