...which is probably why the Wii and DS are ahead of the curve. The games that are made for both consoles aren't visually pleasing like Gears of War or Resistance, but they are fun.
This happened to the comic book industry a couple years ago. Comics became overvalued and people stopped buying them to read, but instead just to horde for a future payoff. The bottom fell out, and now they're forced to write compelling stuff (instead of for instance Image Comics' one trick pony of sex and violence).
That, and the generation that grew up gaming on the Atari and so on are getting older. As we got older, the games got older. There aren't two button d-pad mashers like when we were kids - 6, 7, 8 year olds have to get used to 10+ buttons. The learning curve was a bit easier for us - AND - even if they get a handle on it, there's only Disney retreads that are appropriate for their age groups (not including DS and Wii stuff).
Unlike Sega which was too early for its time for a lot of things (going CD when people were still using carts, for instance), I think Nintendo got the right idea and is a) attacking a segment that isn't age specific and b) keeping costs low by not cranking out huge blockbuster games (isn't brain age a popular game right now?).
At some point the graphics are intricate plot lines are going to be a bit much for everyone except the most hardcore of gamers. Heck, I can't find any time to play the third installment of splinter cell on the xbox.