The Wii was only $250 because it came with a game that they wanted to essentially charge full price for. And Gamecube was not underpowered at all IMO. $300 I can see, but $400 is a pretty big leap.
Anyway, we don't really know how powerful this thing will be, but many people seem to think it will be only a modest step up from Xbox 360 and PS3. Compared to where technology is today that is underpowered.