No, I don't think the wallet should have a limitless capacity. While I agree that having to upgrade the size of your wallet in past games was annoying and unnecessary, increasing its size to hold an infinite number of rupees would do nothing to solve the larger underlying issue, that being the lack of an incentive to spend the rupees you collect. The reason our wallets filled up so quickly in past games wasn't that our wallets were too small, it was that we rarely bought anything and rupees were easy to come by. Even after we acquired the largest wallet, it still ended up becoming full and staying that way. You can increase its size as much as you want, eventually the wallet will be full if there is nothing worth buying and rupees continue to come in copious amounts.
This is kind of an old issue, though. Skyward Sword took a step toward achieving the ideal economy for a Zelda game, and A Link Between Worlds took a fantastic leap. I will genuinely be surprised if Zelda U or any other future Zelda games do anything but improve on this further.