I'm sure that the controller WILL BE the screen you'll play on. The main console probably streams via Bluetooth the screen for the player directly to the controller.
You'll still rely on the main unit for the Graphics and the CPU, so it won't be an handheld.
The camera on the controller will let you use Kinect-like functionalities, while you just use traditional controls + touchscreen for playing.
Maybe the screen will even be a 3D parallax-barrier screen like the one the 3DS has? That way Nintendo could take glasses-free 3D gaming in every house, without the need for a new TV.
Remember: raulpica called it first