Earlier today, Japanese technology firm Digital Media Professionals sent out a press release confirming that they are the providers of the graphics chip for the new Nintendo 3DS.
This chip is called the PICA200, an older GPU (it's from 2006!) that DMP says provides "high quality graphics" with "low power consumption". Handy for a handheld, that! Because it's older, it's also presumably cheaper than something more cutting edge, and we all know Nintendo likes to keep production costs at a minimum (as the company sells hardware for a profit).
To give you a rough idea of the PICA200's power, here's an old tech demo dating back to the GPU's release. Being a tech demo, you have to take it with a grain of salt, but even four years old and covered in salt it looks a whole lot better than a DS.