Graphics, AI, and physics are ALL offered by the 360/PS3 over the Wii. You can't tell me that being able to read signs without selecting them and zooming in (Zelda) isn't convenient and adds to immersion.
The AI and physics are very important for gameplay, because it increases the challenge and strategy involved.
The ultimate machine would be a Wii with 720p, but Nintendo didn't choose to go that route. Next gen we will have a Wii 2 with 720p no doubt, so that is when the controller will really shine, with advanced physics and graphics to match the new controller.