Also, I'm pretty sure that woman was flirting with Reggie.
It's an honor to flirt with Reggie.
In regards to the size, it is on the small side, but everything we've heard so far tells us that the machine is more powerful than the PS3. We've also been told that its a 45nm process, which is what the relatively cool running PS3 and 360 Slims use. With new advances in chip technology, I really don't think its very surprising to a see a system more powerful than PS3 and 360 yet still able to run cooler and fit in a smaller box, especially at 45nm. You also have to remember that it isn't likely to have an internal hard-drive or internal PSU.
The real question is how much more powerful. I'm guessing that it'll be a nice bump over the current generation (better than the Wii was over the last anyway). But it'll probably be smoked by whatever Sony and Microsoft come out with. Nintendo generally makes lean, efficient machines, and the Wii U looks to come from that same design principle. Sony and Microsoft on the other hand haven't been afraid to put out monstrous machines as long as they were powerful.