I disagree with this in the strongest possible way.
My basic attitude is that there is no such thing as a "kid friendly" computer game system, nor should there ever be one. Indeed attempting to have such a label is asking for trouble when parents actually buy into it because they believe the hype.
As things stand now I feel there aren't enough intense, adult oriented experiences on game platforms. I also notice this backpedaling taking place in sync with a lot of censorship battles taking place all over the world. Rather than preparing for war to fight against such things, both ones that have passed, and are currently in the pipe/being fought, Nintendo is basically capitulating.
To be honest the DS/DSi has included some fairly mature games throughout it's history. We've seen games from Japan about feeling up girls with the sylus for example, and while it goes more in the direction of violence we've had games like "Dementium" and a couple of Atlus offerings that were pretty violent and/or involved themes that probably shouldn't be considered child friendly.
A site with a woman posing erotically with a DSi is no big deal, and I don't think Nintendo should be trying to divorce itself from this kind of thing, given the games that have already been produced for it's system. While a producer of a lot of kid-friendly fare, Nintendo has tended to see a multi-faceted game library for it's portables, which is probably why they have attracted such a large audience, including a hardcore gaming crowd.
Right now is a time when companies like Nintendo should be closing ranks with other game companies to throw some of these huge mountains of cash that they have been making from us against oppressive goverments. As many people will tell you, big companies with hundreds of millions or billions of dollars can be more powerful than national goverments in many cases, we're always complaining about how that works. Time for them to start flexing some of that muscle, both legally and illegally IMO, rather than chasing internet soft porn stars around. I bet Nintendo is really proud of this one, bully much?