Flipnote Studio is due for release this week on the DSi, but according to a new Iwata Asks feature, it was originally a secret after-work project.
Nintendo's Hideaki Shimizu and Yoshiaki Koizumi revealed that the animation tool originally started life as a secret project, with the pair trying out ideas on the Wii initially. There were several projects devised for Wii, but nothing came out as they'd expected - so after a change of direction started to draw up ideas, literally, on the DS.
Originally it was designed for WiiWare, where players would exchange notes with friends, however with the blatant pen/stylus input method for Nintendo's portable, Shimizu and Koizumi bounced to the DS to create Flipnote.
The first thing we thought of was using the Nintendo DS download feature to put a WiiWare art tool into your Nintendo DS. In other words, you would download Flipnote Studio, and then return your creations to the WiiWare tool and save them. Then we talked about making something like a bulletin board so you could share your saved notes with lots of people over the Internet using Wii. About that time, Takashi Tezuka came on a business trip from Kyoto... We realised the Nintendo DSi was perfect for what we were making
More details can be found in Iwata Asks - Volume 7.