Oh, so it's a sort of demo-download channel?
From the article I read at Game|Life, coupled with a picture from that Miyamoto interview, at first I thought the Nintendo Channel was a webcam to spy on whatever Miyamoto was up to.
With a name like Nintendo Channel, I'd expect something more epic, more all-encompassing. Maybe like an online database of tips and tricks for all your favorite Wii games, like an online version of Nintendo Power. Or buy NP issues and Mario plushies and Mario Kart soundtracks off the channel. Just something more than demos.
The article at Game|Life does bring up a good point though: since it takes up even more blocks of space on your console, and lots of information is transferred to Nintendo when using the channel (including amount of free space available), maybe it will make Nintendo finally get the picture and up the storage limit.
With the N64 and GameCube, I'm sure many of us quickly went to a third-party memory card the first chance we got. And Sony Playstation 2, come to think of it. The thought of not having a third-party solution (that I know of) to deal with the small storage limit of Wii, while offering a multitude of Virtual Console games that people just might want to keep on their consoles and play... boggles my mind, this situation needs to be solved at some point during the Wii's lifespan.
But I will admit this, after hearing horror stories of third-party memory cards going corrupt (personally I've had a third-party PS2 mem card go corrupt), maybe they're onto something by staying with small limits for mem cards, just to keep it stable. I really can't imagine memory stability being an issue for Wii though, I'd say they just went cheap and didn't want to make the console any more expensive than it already was. Or they're firmly going for the casual crowd and figure no one will fill all that space.