Nintendos service is entirely different. Their idea is to have a completely BC console with every other console they've ever had, plus Genesis and TG16 and now Neo-Geo. Nintendo also has pretty clearly shown VC to be a fanservice, first and foremost. They're bringing fan favorite games to VC because fans are demanding them. I also believe they brought out VC to stem piracy of ROMS - they though that people wanted to play those old games and would be willing to do so, and 3.3 million sales proves that they are.
I never was attracted to arcades(likely because I'm younger than most of you 30 year olds and they were dead by the time I had that kind of expendable cash) and XBLA dangles brilliant stuff like Geo Wars and Cloning Clyde and Space Giraffe in front of us.
The one retro one new is an amazing step in the right direction. Quality is there for the new games, no doubt. They've expanded XBLAs appeal to where you almost have to have a couple of the games if you own a 360 and consider yourself a gamer. Have you seen the Neogaf XBLA sales thread? Our arcade game attach rate is INSANITY. According to joaomgcd, (
http://web.tagus.ist.utl.pt/~joao.dias/GafGamersLeaderboard.xml) we're averaging 10 games per person. Thats crazy, because you can't rent those.