I guess I'm confused, but how exactly will admitting failure and announcing a console 3 or 4 years in advance, and less than a year out from the Wii U's release, help Nintendo? This seems like a scenerio that would kill PR relations for Nintendo indefinately. A sinking console is one thing, and the truth of the matter is that the majority of people don't even realize it exists, but to announce that you give up so early on doesn't exactly instill a lot of faith in the brand. I also don't think Nintendo could get a new console out that quickly, not without cutting some serious corners.
Nintendo took a lot of gambles on Wii U that didn't pay off. Nothing can change that now, but it would be far less damaging to them to continue on the path they've chosen. I don't think anyone is argueing that Wii U will be crowned winner of the console race, but Nintendo has the resources to stick it out for the time being. It also doesn't hurt to have the 3DS as a back-up.