Yes it's HD, and Nintendo is going to work more closely with Third Parties.
We have confirmed with multiple sources that this new home system is capable of running games at HD resolutions. There are conflicting reports, however, as to whether its graphics will be comparable to those on the Xbox 360 and PlayStation 3 – meaning it could surpass or fall short of those systems. Either way it will offer competitive specifications. Moving to HD should greatly help Nintendo and its new console in getting more multi-platform triple-A titles like Portal 2 or Mortal Kombat. This, in turn, will strengthen Nintendo's historically poor relationship with third-party publishers/developers.
In fact, Nintendo is already showing publishers the system in an effort to get them interested and allow them plenty of time to start developing titles in anticipation of the system's reported late 2012 launch. This advance support marks a change from when the Wii launched. At that time, several Western publishers were outright surprised by the announcement, and it affected the software support for the platform.
Nintendo president Satoru Iwata himself acknowledged that it needs to do a better job with its publishing partners at a 3DS press conference in the fall of 2010. "We need to decrease the concern that only Nintendo software can sell well on Nintendo platforms and third-party software cannot sell in the same volume. We feel a need to have closer ties with our third-party developers from the beginning."
"Nintendo is doing this one right," said an anonymous source. "[It's] not a gimmick like the Wii." What else, beyond graphics, this may infer about the system is unknown. What kind of controls the system will support (we imagine a need for both classic analog configurations and motion controllers) or what level of software and infrastructure Nintendo will provide for online gaming is also unknown. However, it's a positive sign that the system might be more than just an HD Wii.