If they do this, they lose an incredible amount of time and money. They would have to produce millions of wii lites and give them away for free...exchanging it wouldn't be much better, as people would just buy new wii's instead of used ones, so nintendo would be left with millions of unselling wii's. Also, if they decided to wipe all the memory off the wiis to sell them as "new", that adds up to millions of dollars they need to spend on employee overhead.

If they don't do this, they would still lose an incredible amount of time and money, due to competition with their own product. Think about this:

You go out to buy a wii. On the shelf you see two boxes: one is a wii, the other is a wii lite. Obviously you aren't going to buy both of them. You decide to buy the wii lite because it's better, right? However, if nintendo didn't create the wii lite, you would have bought the wii. Therefore, nintendo gets the same amount of money regardless, and they would just waste their time creating the wii lite.

Also, unlike a new system, people wouldn't rush out to buy it. Why spend another $300 to buy what you already have + a few minor features? It wouldn't sell at all, and like stated above, it would compete with the original wii.