I hope not, because I'm with David Lynch on this one.  If you like films you won't be watching them on screens this size.  For TV shows and the like I guess why not?  But anything cinematic?  Horrible.  Mind you I still think TVs are too small really.

PSN didn't exist in 2005. PSP would have worked a lot better as a movie player if all the movies were download only and it would cost 10 dollars for it or something.

As for 3D movies succeeding on 3DS, it really depends on what kind of movies are available on the handheld.

get 3D movies via Netflix and Ill get it.

They need to keep them digital, but I think the biggest factor in movies being a success on 3DS have to do with consumer adoption.  

When UMD movies came out, DVD was already entrenched, and people generally didn't want to spend the same amount of money for a movie twice just to have it portable.  The other problem was that Sony never followed up on their initial promise to spread the UMD format beyond PSP, and have dedicated UMD movie players on the market.  The rise of digital formats for mobile use probably played a large part in that, but the problem remained; UMD was just as expensive as DVD, but more limited (less space, less extras, PSP only).

The key difference with 3DS imo, is that 3DTV isn't already adopted by the mainstream (and doesn't look like it will be anytime soon), so there's already immediate inherent added value in a 3DS movie release that didn't exist for UMD.  This isn't limited to 3DS either, but really any 3D capable mobile platform (like those Sharp phones).  And now it looks like Hollywood is catching on, and seeing mobile 3D formats as possibly a better consumer alternative to 3DTV at this stage...

On another hand, I bet some website will be 3DS enabled and it will have tons of movies to watch in 3D on the 3DS.

Only thing you need is to type a web adress on the 3DS browser.

Netflix on 3DS is pretty much a no-brainer...it's gonna happen. I actually won't be surprised if Nintendo just has a Netflix channel available right from the main menu at launch. Netflix on Wii is UNBELIEVABLY popular, and they (both Nintendo and Netflix) are going to want to capitalize on that with 3DS.

Beyond that? I think Nintendo would be wise to setup a deal with Amazon.com so that movies AND music can be purchased from their service...just like on Android phones. Amazon and Netflix don't really compete against one another, so it should be fine from a partnership standpoint. 

Oh, and as for the screen being too small I don't think that'll be a problem. The screen is 3.53 inches. That's about the size of most smartphone screens nowadays. I do wish it was 4 inches, but this should be fine. 

UMD movies failed because they were so damn expensive at the time, almost or the same price as a regular DVD- and also was a battery hog which made the psp usless after watching one movie.

This will work great for the 3DS.

1) no moving parts needed. (no media drive)

2) A movie on a cartrige is battery friendly.

3) And mainly if they keep it within frugals reach.