Nintendo: Gaaaaaazeeeee into my eeeeeevil eye!
Capcom: How may I serve you, Evil One?
*shrug* I've never heard any details about it; I presume Nintendo simply found a way to persuade Capcom to support the GameCube early on. I guess Nintendo was looking to diversify their product line - get away for their just-for-kids image - while Capcom...well, I'm not sure what they got out of jumping ship from Sony. Free ponies?
But it seems clear Capcom has reconsidered their position, considering how most of their "GC-exclusive" titles have or will be coming to the PS2.