Looking at my "must play" DS list, I realize there are dozens -if not hundreds- of relatively cheap RPGs that, for one reason or another, were never fully distributed, localized, translated, or just distributed right. The DS was famous for beiing a really cheap platform to develop for, so even with low sales they made a profit. Years later, we find that those games have become a rare item, while the next Nintendo handheld, the 3DS, suffers droughts from time to time.

Why aren't those small pulishers trying to update those same games for a 3DS release, or even the WiiU virtual console? The games are already made, some are even translated already. The 3DS has a bigger core audience, and titles like Devil Survivor have sold better on the 3DS than the DS, while having 1/3 of the installbase. They could even go digital only and still get a profit. And if you don't want to make the efford of updating the game for the 3DS, why not he WiiU VC? That system suffers from even more severe droughts, so its audience could really welcome a game that was never released on their region.

Why Nintendo isn't encouraging it? They seem to be moving resources to the NX, so why not letting third parties help?

Also, why isn't there a DS VC on the 3DS? The system is already backwards compatible, what the hell?

Soma Bringer, Xenosaga I & II, and a few GBA games (magical vacation, starfy) come to mind.

I guess they see it as a waste of time, since most of those small RPGs are part of dead franchises or the solely entry in theirs. Or maybe it takes resources and they're not easy to emulate/port to the VC... And Nintendo themselves said that.

Because it costs money, even if all it needs is some simple port?
Its not simply a matter of "we have games old games, lets put them in VC and make money!".It costs money and manpower to do that, and most of the time it dosent pay off.Sure, some titles like the world ends with you or Radiant Historia could ceartainly be successful, but those are the best among the best.The other ones, the other rpgs that release in the ds and are more obscure, sold very few for a reason.And putting them in the 3ds wont give them gigantic sales increase.Not to count the shovelware that the DS receive due to its popularity.Its a matter of costs X lucratibility and unfortunaly, if the game is too obscure and its not nintendo-owned, it probably wont see the light of day

Too niche, the costs to localize and publish them in other territories would outweigh the potential revenue ... 

Plus most of them are dead IPs too which makes it harder to sell ...

Not really a great argument when PSP games are still localized. I mean, it's a pretty easy reason, but it is kinda sad that support shifted so quickly to 3DS despite there being so many untranslated DS games (although we did get Inazuma 11 on eShop).

I just wish they'd add more old school games to the virtual console on the 3DS.

JRPGs are sadly a dying breed in the West. That's 100% of the reason. If the market was there, the games would be there as well.

Only a small portion of them got localized since 2011 so that's not a very convincing counter example ... 

We're arguing several localizations to zero localizations. The fact that a PSP game is getting released this year is the point. We're still getting games for a far less popular handheld that is just as niche as the comparable DS offerings.

No matter how you slice it that is still a low number and as far as "zero" games go since 2011 that's a lie. Even if we were counting this year only the PSP still only has like 3 games coming over to the West and one of them is a remake. That lineup is just as paltry and pitiful as the DS's (if it has any) ... 

The PSP may have been far less popular but where exactly are the developers which are loyal to making content for Sony platforms supposed to go now ? The software sales for the Vita is terrible and they'll be running into trouble against AAA developers on the PS4. Are they supposed to make games for the 3DS now ?