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Thinking of the Wii interface, adding 1 "channel" to play dvds would make it no less nice or simple or versatile, I think. Or, even just using the same channel you use for games, since you either use a game or a dvd, would have been probably even simpler.
I think, however, that simply "adding a channel" is not enough. You have to then write whatever goes into that channel to control the DVD, provide menu options, etc. I have a couple of DVD players, and they are not all the same. My cheapest one doesn't deal with the menus on some DVDs well, and others exhibit other strange behaviors.
So once you add this capability, it DOES add complexity to the product, requires more QA, and will bleed resources (or require more of them) from other poritions of the system.
My Wii is hooked up to a small TV in my study that does nothing but play DVDs and games. I have a seperate DVD player for that room, but it would be nice to have that shelf space back. In short, I've felt like it would be a nice-to-have if the Wii would play DVDs. However, I wouldn't have wanted to pay even $25 more for that functionatlity, nor would I want to sacrifice anything the Wii currently offers.
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-Jeff
Rome did not create a great empire by having meetings; they did it by killing all those who opposed them.