I’ve now played with the 3ds on two occasions (once in a GameStop and once in a Best Buy) and the second was worse than the first. In essence, the new display looks great if your head is in a very narrowly defined “sweet spot” (your head needs to be horizontal and straight back from the display about 12 inches — I’m guesstimating the distance). Slip more than a few inches outside the spot or tilt your head* and the display shows visible banding and/or simply looks like a dim 2d display.
* I don’t know about you, but I tend to lean a lot when playing first person or third person games, and this is going to suck monumentally on the 3ds.
It’s better than 3d glasses or the 3d displays that use layers of LCDs (we saw one at a Siggraph in 2004 or 2005, and my wife’s VR lab ended up buying one) but that’s not saying much. In the end, it’s a gimmick, we’re told not to let kids use it (!), and it causes me eyestrain within a few seconds.
The best thing about the 3ds is its analog stick.