In short, when you're playing a DS game on your 3DS, all 3DS features are shut off.

The DS game cannot be "paused" for you to return to 3DS menu. It actually reboot your 3DS when you load/unload your DS game.

I noticed the wireless light stopped blinking, too.

And you'll also get a notification telling you so and so features are turned off while playing DS game.

OT: DQMJ collision system is so horrible, wonder how I didn't realized it when I first played it.

yeah that is what happens with old games on new system

I thought it would retain streetpass/spotpass, etc. Didn't think it would actually boot into DS mode.

Some hardware features are also turned off with 3DS games. I remember reading that OoT 3D turns off your wifi connection.

isn't the 3DS a multi-core system?

I wonder if you could have one core emulating the DS and the other adding some top-level OS stuff like pausing etc. without interfering with the flawless b/c. They could make it so that when you press the Home button the system tells the game that the DS has been folded shut, so it would automatically pause itself. Then the other core could offer some additional features like wifi for spot-pass or Internet browsing etc.

I'm guessing this is how Wii U will handle Wii b/c, by running on only some of the cores and either shutting down the rest or using them for something else.

Thinks for that info, you just sured me to stick with my DS lite till Nintendo drop price again on 3DS.