It'll be interesting to see if they come up with a bombshell GPU in the future. They certainly have significant graphics technology to leverage against everyone else. They seem to be getting pretty serious about games on these devices as shown by Tegra Zone for example. But I'm sure there is a limit as with desktop IGPs where it won't make sense to add more GPU power because few users would appreciate it and so the value is nil.
The whole thing could very well parallel Atom vs ARM. Intel has way more expertise in high-performance CPUs but is still struggling to come close to high end ARM on perf/W. nVidia at least has the good sense to keep W down, but that could cost as much as perf. Just knowing what we do about the arch it's not hard to imagine that Tegra isn't a perf/W leader in the mobile GPU space, even before you take into account any possible lack of low power engineering experience.
It's interesting that you mention limits of desktop IGPs because Trinity seems like it's going to be pushing the boundaries of how much GPU capability they can shove alongside a CPU, and even Llano is already bandwidth limited much of the time. Seems like there's a user demand for putting in as much as is commercial practical. This is way more than what we saw on motherboard IGPs, though.
If nVidia didn't see something like SGX543MP2 taking off then they underestimated the market rather than the GPU vendors, since it was obvious that capacity (and much higher) existed in future PowerVR designs. To their credit, it really only is one company pushing this, and normally that wouldn't cause a big rift: too bad it happened to be Apple. At the same time, if they were really trying to sell to Sony for PSP2 then there's no way they could have thought GeForce ULV as it currently exists would be sufficient.
On the other hand I agree with Ailuros, that nVidia seems to have way more experience in writing high quality drivers. And in the GPU domain that's not that influenced by power consumption.