Evolution, not Revolution (pun intended)
If they can bring out an HD capable version, backwardly and forwardly compatible with everyone's existing games, paid downloads and saved data by some mechanism, that will be a winner enough for the target demographic. New control mechanisms are not essential, with the competitors only just playing catch-up. I have reasonable confidence Nintendo can deliver this.
The reality has shown that Wii games are casual gamers, who will not upgrade lightly. They (and I include myself in this number) see the Wii as an appliance as much as anything. Nintendo must encourage developers to design games that will run on both platforms, making best use of the HD etc on the new model, but still compatible with the old.