The PS2 won the last console cycle and it was weaker than the Gamecube and Xbox. So graphics aren't going to hurt them incredibly, the Wii is already doing well. It has decent games coming up as well as a very attractive bunch of launch titles. That and Nintendo has a huge fanbase, so there are tons of people who will get it/have gotten it. While if it had better graphics, it would help. However, they'll make out just fine with what they have. The graphics are likely to improve, all systems start out a little underwhelming in the graphics area.
It won't look as good as it's competitor's but it is bound to improve. Also, to my knowledge, you don't need a hi-def television to fully enjoy the Wii like you do with the PS3 and 360. So maybe it's lesser graphics will help it since it will attract more people. I don't think most average everyday people can afford a (more expensive) game system and a new hi-def TV.
If it affects sales, it'll only be to a minor degree.
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