Nintendo has constantly stated they need a game to show people (casuals) what the gamepad really does for gaming, their "wii sports". I am pretty convinced that is what he is working on, and it probably isn't going to be some mature hardcore game, it will be the casual king of casuals (I say this in a good way). It will be something excessable to all ages, and it will have little substance for the die hard fans to sink our teeth into. But, it will sell the console like hot cakes. I could be wrong though, and I really hope I am.
ALSO, DON'T MENTION MIYAMOTO DYING!! 61 is seriously not that old, he is not gonna die any day, as far as I know, he is in excellent health. He will be the cutest old person to ever live.
MIYAMOTO however has in the past stated he has a fresh idea for a first person shooter. I think he could easily create an accessible game that shows how unique the game pad is, and have it to be a modern adventure game.
We'll see though.