Iwata isn't very good at what he does. He's had two pieces of hardware under his watch, the Wii U and the 3DS, and each one is a disaster.
Haz wrote a nice post about how Iwata is making the company go down in flames
So the Wii U is dead in the water. It'll get some software but really it's done.
The 3DS is another creature altogether and where Iwata made his biggest mistake.
In order try to fix the disaster that was the 3DS Iwata cut it's price by more than 30%. It flew of the shelves and is selling well but besides losing more than one third on every single sale it has permanently hurt the DS brand.
I have a friend who said "you can never go back from free" meaning that once someone knows that a product has been released at a low price point you can never raise that price without causing problems.
Nintendo has always set the gold standard for portable game systems and their prices, they dictated the market. They have told the consumers "we know what we want this to sell for so that is how much it's worth".
In an age of mobile devices Nintendo released a product that wasn't wanted with a gimmick that was already on it's way out at launch. When it sold poorly Nintendo acquiesced and for all intensive purposes said "you are right, handheld gaming isn't worth our asking price" and sliced more than one third off.
Once that cut was done on the DS brand it couldn't be reversed. When the 3DS XL was released it had to have a lower price point because of the 3DS price cut. That of course started problems because the original 3DS sold for 250 but the 3DS XL sold for 200 and the arguments of Nintendo charging too much for low tech devices really took hold.
Iwata has now has set a disastrous precedent for Nintendo. He has come out waving the white flag saying that their hardware is not worth the initial cost of ownership. Whoever takes over for Iwata will need to operate under the new rules that Iwata's made.
Iwata is going to be known for many things that went wrong for Nintendo but the biggest thing will be how he devalued the company's entire handheld brand not only today but for the company going forward as well.