We analyze the morphological stability against azimuthal, axial, and general helical perturbations for epitaxial core-shell nanowires in the growth regimes limited by either surface diffusion or evaporation-condensation surface kinetics. For both regimes, we find that geometric parameters (i.e., core radius and shell thickness) play a central role in determining whether the nanowire remains cylindrical or its shell breaks up into epitaxial islands similar to those observed during Stranski-Krastanow growth in thin epilayers. The combination of small cores and rapid growth of the shell emerges as the key factor leading to stable shell growth. Our results provide an explanation for the different core-shell morphologies reported in the Si-Ge system experimentally and also identify a growth-induced intrinsic mechanism for the formation of helical nanowires.