Turns out, the way that Nintendo was planning on taking the company with the then upcoming Wii console didn't jive with Silicon Knights. They didn't like the fact that the Wii wouldn't be competitive, graphically, with the other consoles on the market. Silicon Knights wanted to make games with jaw-dropping graphics and high production values, but Nintendo's new approach wasn't helping with that. So, they turned to what they believe is the best hardware on the market, in Microsoft's Xbox 360 console.
The interview is a very good read, so be sure to head on over and check it out.