actually, it would probably be entirely different from any of the previous games, but pulling on different aspects of all of them, as well as adding in new features that teh DS brings to the plate.
There has already been a number of sprite compilations that make a 2D fighter totally possible, some people have already put flash versions together.
But on the other hand, Phantom hourglass has shown that the DS is totally capable of 3D graphics roughly beteen that of N64 and GC. Personally, I'm favoring the 3D style, even if they have to step it back down to a slightly cleaned up version of the N64 graphics.
Costumes may need stepped back to pure red, blue, green, normal costume(or 4th choice if their normal costume already is red blue or green)
I see the display style being set so that it primarily uses the top screen, with the camera set so it only follows your own character, this will allow you the best use of the fact that everyone is playing on much smaller screens, but also the fact that everyone has their OWN screen.
The bottom screen would show an entirely zoomed out map of the stage. This will allow you to tap the screen if you want to look at other characters that are outside of your view. Typically not really essential, but since the controls will use the buttons and Dpad rather than stylus, it'll be best to keep the necessity of using the touch screen to a minimum.
For the button arrangements themselves, I see them using a style that is a cross between the single wiimote style and the classical controller style for brawl. L button for Jump or changed to be for shielding, and you can choose if up counts as jump, or if you only want it to handle the direction of your attacks. A for regular attacks, B for special attacks. A + B for smash attacks. R for grabbing, X for shielding, Y for jumping. Layout can be changed to switch B with A, and switch X with Y. Layout can also be changed so R is just shielding and so that either X or Y(whichever is usually shielding) is now the grab button.
The only other question is what pool should these characters be selected from? since we're talking about a handheld instead of consoles, wouldn't it be more likely to pull from previous gameboy and DS games?
I see Mario, Luigi, Wario, and Yoshi following the Mario64 DS game, so mostly unchanged, but possibly using their different powers from that game. Samus would likely stay much the same as melee. Link would likely be getting switched to the Phantom Hourglass style and have the grappling claw instead of the hookshot.
Peach would likely show up since she's even gotten her own game on the DS, same for Kirby. Kirby probably won't change much, but I think Peach would probably end up incorporating that whole emotion gimmick that her game has in some way.
I don't know if Donkey Kong or Bowser have had much of a showing, but they've at least been in the racing and sport games, and their larger size would likely be needed for game balance.
Zelda hasn't really shown as prominently in recent games, she may end up getting replaced with Tetra, but I've got no clue what her abilities would be.
Pokemon would HAVE to be in the game. Pikachu and Jigglypuff would remain the same. The trainer that was introduced to brawl might end up there as well.
Fox, Captain Falcon, and then possibly a fire emblem guy(Marth? Ike?) and an advance wars character might show up.
That gives us 16 - 18 characters just by going with the regular cast. So not a bad lineup.
It would be hella amusing to see Pheonix Wright or Elight Beat Agents show up, but they'd likely be limited to Assist trophies. It would be interesting if they had the agents show up on the bottom of the screen and you had to actually play the game and it would let you do direct damage to all opponents(provided they don't shield), but if you messed up, you'd be the one who took damage. Ace Attorney could be set up so that if you shouted objection when you got attacked, it would allow you a counter attack.
You could have a similar setup with Brain Age. Do the whole "say the color thing" and if you get them right, you get healed, do more damage, take less damage, or do direct damage to your opponents.
I see there being a DS download mode for this, but it's got to be limited somehow, possibly have it so you can only choose out of 4 characters (Mario Link, Samus, Pikachu), or can only play on 4 stages(I'm guessing 6 - 8 that can't be selected without the game), or likely, both of these. To be able to access the other characters and stages, you'd need to get your own copy of the game.
Online multiplayer would be an obvious must, but I'd kinda like to see this incorporate VOIP, since the DS has the capabilities for it, but it would HAVE to have a mute option, and have it set up so the mute option can be specific to individual people you're playing against, and not just mute all.
The one truly interesting idea the DS brings to the floor is that you could actually have even more than 4 players. If the screen is set up as I've posed, there's no upper limit in terms of screen size to what can be handled, the upper limit is entirely hardware based. Potentially, you could have up to 16 players since each one has their own screen keeping track of where they are.
Likely though, it would be limited to 4, just for keeping things from getting too out of control (15 on 1 is a bit much, isn't it?) and also space, since the stages would be getting pretty crowded with 16 people on them.
Items would likely need to be cut down to bare bones, probably limit it to the N64 versions item choices.
As far as single player modes go, it really shouldn't be stressed too much. Have it set up as a series of steadily increasing fights to get to masterhand, don't worry about an adventure mode and stuff.
Training mode would be essential, but I don't see the "break the targets" and the other minigames as being something that should be included, cut it out to save space. Don't worry about collecting trophies or that other challenge or trial mode that melee has.
Of course, being able to set up a multiplayer match with computer opponents will still be essential. Whoever is hosting the game will pick whether a game is 2, 3 or 4 player melee, or if it's a team battle of 1 vs 2, 1 vs 3, 2 vs 2.
The hosting player will then choose their character and any Computer opponents. If all spaces are filled by the 1st player and computer opponents, then the game is not even broadcast at all, but if there are blank spaces left, the game will be broadcast.
Hmm... I hope nintendo announces this soon. Of course now that I've gone this far, I'll almost certainly be disappointed when they do something different.
EDITED to add in full control layout.