This is very smart on Target's part, they likely have a decent backstock that isn't moving at $199.99. They know the price drop is coming in a month for $149.99 (so do most people). If I'm not mistaken, they are on the hook for the price of the current stock (i.e. Nintendo won't refund them $50 on their backstock). They will take less of a hit if they can move a good chunk of them at $169.99 rather then waiting for the official price cut.
The Wii 2 is a good 1.5 years plus away, even then the Wii will move at $99.