First off, I know that emulators are "illegal"-- but for legacy systems that no longer yield any income to ANYONE other than maybe Gamestop who resells used games, I don't see the harm in them. Honestly, Nintendo, nor third-party N64 developers are hurt by the N64 Emulator crowd.
N64 games are still sold "new" off the Wii's virtual console. So yes, emulation affects them.