They don't want people making games because it is somewhat illegal to have the code for Nintendo's game coding
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http://www.nintendo.com/corp/legal.jsp#copyrights
Copyrights
A copyright is an exclusive right granted to an author of a literary, musical, audiovisual or artistic work, giving the author the sole right to reproduce and distribute that work. There are several different types of copyrights which are associated with Nintendo's products. These include various copyrights in Nintendo's software source code, executable code, game visual display, game music, game characters, product packaging, game manuals and labels; hardware chip microcode; artwork and publications.
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Wouldn't it also just be possible to ignore updates?
If not deal with or go find something better to do.
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edit: i just thought:
why doesn't Nintendo block every game that is home brewed. And just update it to allow news games as new ones are released.
It has more to do with people breaking their systems and then trying to return their systems or using the software to run pirated games. The software isn't illegal, they didn't decompile nintendo's code and use it to make their own software, they're exploiting problems in Nintendo's own code to run their own.
As for violating the EULA, there's some legal opinions out there that this kind of EULA isn't even legally enforceable. I'm not a lawyer, but I think the fact Nintendo hasn't tried taking any of these people to court speaks for itself (although it's possible they don't care enough to spend the money).
