1. I think Nintendo is going to start by pricing the 3DS high ($200+). Even after inflation, that is an unusually high price for a Nintendo handheld launch. But Nintendo can pull it off with an inter-generational strategy. The DS Lite will be marketed towards the laggards (haven't bought a DS before and they want something dirt cheap). The DSi and DSi XL to late adopters (haven't bought a DS before and don't wanna pay a fortune for a handheld). And the 3DS will be marketed towards early adopters. The early and late majorities (current DS owners who don't wanna pay $200 for a 3DS or want to wait for the library to grow) will stick with their DS for awhile.
After the DS Lite and DSi start to really fade, then Nintendo will lower the price of the 3DS (by then, the technology will be cheaper. So they can afford to do so) and market it towards the majority.
2. 3DS won't be any/much bigger than DSi in my opinion. Portability is a crucial factor. If you can't fit it in your pocket, it will never take off. People don't want to have to carry a bag with them. There is a market for super sized handhelds (DSi XL sales prove that). But most gamers are going to want something they can fit in their pocket.
I don't have anything new to add to 3-5.
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