Effectively, Nvidia has elected to take a speed hit on current/near future games (compared to ATI), while gambling that they can get that loss back using SM3.0 over the next year or so.
Funny that you mention that, since ATi did exactly the same with R9700.
Instead of having optimized integer pipelines, like the FX, they chose to have FP pipes only, and emulate integer operations on it, at the cost of performance.
For ATi it worked out, because SM1.x games were 'fast enough', while SM2.0 ran great.
And we all know what became of the FX.
Ironically the tables are turned now. I think NV's choice is the right one (as far as I've seen, NV's SM2.0 performance is not that much less than ATi's, and SM3.0 is already giving them gains in FarCry in some cases). And I think that ATi will not wait as long with a good SM3.0 card as NV did with a good SM2.0 card (I consider the 6800 their first good SM2.0 card).