I don't know. They're not making any money off those games now (except for the very occasional highly popular ones that they port to the GBA). Putting all those games online for free would be a big draw for the hardcore console gamers, I think, and that's an area where Nintendo has lost a lot of ground. If they can get more Nintendo consoles in the diehards houses, then that's that many more games they have the opportunity to sell.

Also, porting games to a new system costs a lot of money, I would imagine, for each game. But if they put some emulation in the console itself, that's pretty much a one-time development cost. (And it's vaguely possible that they ported some preexisting open-source emulator, reducing their costs that much further.)

I suppose if I were Nintendo, I'd put all the also-ran games online for free and maybe offer the really popular ones for a small fee.