Or in simpler terms, when the Playstation 4 and Xbox 720 (not real names, hypothetical), will the Wii U still hold up as far as technical capabilities go?
I doubt it. From what I've heard, the Wii U will be 50% more powerful than current gen Xbox/PS3 consoles. That's really not all that much of a leap ahead of 5 year old hardware. Although Sony claim that games still aren't pushing their current hardware to it's full capabilities.
My theory is that as hardware gets ever more powerful, it's going to be harder to tell the difference. It won't be like the days of going from 16-bit systems to 3D graphics, or later from blocky CG graphics to rounded organic forms. I think a lot of games will look much the same, and you'll only really tell the difference when you go up next to a wall or an object and the textures are still as high-res as ever. Maybe we can expect more sophisticated lighting effects and texture pop-in to be less of an issue. How much will the average person notice?
On the other hand there've been rumours of 'Avatar quality' graphics, and if that's the standard to be met, the Wii U might struggle to keep up. My suspicion is that gaming companies will have difficulty delivering that standard. Avatar cost half a billion dollars, and I think for the average game, the economics will hit a brick wall well before that.
Artistically a game can look good despite technical limitations. There's games from 20 years ago that still have appealing design and are nice to look at. There's games from this year that manage to be unintentionally hideous. It's really about working creatively within the limitations of the hardware. Even if the hardware specs of the Wii U fall well short of the competition, I fully expect Nintendo will have the artistic capability to deliver games that look gorgeous despite leaner hardware.