I don't believe that the 3DS itself has any fatal or serious flaws. It's a fine machine and it has some nags like the battery. The machine itself isn't the problem here.
The problem is everything else. Nothing else has matched up to the confidence the machine itself has generated. The launch line up is a bit oh hum although much better than the DS launch. It has a self inflicted sticker price shock thats going to make people think twice and bite Nintendo twice. Nintendo now infamous pissing around with online has come about again with delays and lack of any substantial infrastructure investment on their part. Nintendo is starting to show some hubris, although no where near as bad as telling people to get a second job with their increasingly discriminatory pricing towards most of the world.
I have to fundamentally disagree with most of what Chris has said. The iPhone and others like it are never going to be a real threat to gaming as we know it. While there is some overlap, you can not wave away the fact that a game playing device is fundamentally different to a Phone or multi-function device and it has be to. The 3DS primary function is to play games and everything to designed around this. This is not a niche, a massive population of people out there wants something that just plays games. It is the iPhone that is the niche. It fills the distraction level of the market that game players aren't quite as good at due to price and differing demand. In the end, it's not really gaming, it's a distraction. A person who buys a 3DS is buying it to play games. This is not true on multiple levels for phones.
If distractions is what gaming is coming to, I will have none of it.
Besides, who the hell quotes a NY times article that forms it's entire basis on what Pachter says.