The interview can be foud here: G4 Iwata Interview
"In the G4 interview Iwata when asked about the graphics on the Revolution said that when hooked upped to a regular television (360,PS3,Rev) Iwata said that he doesn't think you will notice a difference. But when you look at the specs it will appear that the PS3 and 360 are much more powerful.
Also a source of mine who is working on a few multi-platform titles basically confirmed to me that Nintendo has indeed developed a way to developed amazing visuals with much lower specs compared to the PS3, and cost. Saying that if the Revolution had even 360 specs along with Nintendo new rendering methods it would top the competition graphically easy. That how great the new methods are. But that nintendo aimed to keep prices down. Take note that he didn't tell me just what the graphical difference will be with the rev with 360 and PS3."