It uses a new GPU which we know the video processing capabilities of, but not the exact clock speed, so we can't predict its power with 100% accuracy. Estimates are that it's somewhere between the GCN and Wii visually, but with more shading and lighting tech on board.
Some footage suggests it might be considerably more powerful than that, actually. That footage is real-time and in-engine, and looks incredibly impressive, but it only shows them up close, in a pitch black, featureless room, with only a single light source. So it's difficult to gauge the graphical quality we can expect based solely on that. A better indication might be the trailer for Kid Icarus Uprising.
Either way though, you can reasonably expect it to pack a visual punch significantly greater than the existing DS. It's a new generation of Nintendo handheld, not just some added features as with the DSi and XL models.