I agree with you, the 3DS is fundamentally flawed by design. There is the lack of a built-in second analog stick, the screen-scratching issue, the sub-par 3D effect and battery life, the low-quality cameras just to name a few problems. It's pretty surprising that Nintendo didn't realize that the 3DS was plagued by these issues during development. I would like to think that their engineers aren't that horribly incompetent. I wouldn't be surprised if they purposely skimped on some features so that they would have things to improve on in a redesign, though.
Hardware issues aren't the only thing wrong with the system, there are a number of problems with the software itself. The whole friend-code system is archaic and shouldn't have been there to begin with especially considering the WiiU won't have it, the eShop just plain sucks, the interface lacks polish (needs folders) and the friend list lacks any sort of messaging system rendering it useless. While all of these issues with the firmware itself can be fixed with a system update, I doubt this will happen knowing Nintendo but I would love to be proven wrong.
And to be honest, I doubt many people would have paid attention to the majority of these flaws if the 3DS had a solid launched. During E3, I was one of the many people who were genuinely excited for the system. If it was launched properly, I have no doubt that it would have been a hit. Sadly it was botched with a horrible launch-library, the fact that the eShop and internet browser weren't present at launch and the utter absence of proper advertising that helped the average consumer realize that it wasn't just another DS redesign. Nintendo should have waited until autumn or the holiday season before releasing the system. By then they would have been able to have some great games ready by both first and third party developers and everything (eShop, Nintendo Video, internet browser, etc.) else finished and ready for release.
This doesn't go without saying that I do think that the system will be a hit. The DS was about the same sales-wise as the 3DS until the DS Lite launched. I do think that the system needs a redesign, though. Certainly not now as that wouldn't be feasible and would be pretty much a kick in the face to existing customers but rather sometime in the near-future. The 3DS does have a lot going for it, there are a lot of great games coming for it and it's pretty damn powerful. If Nintendo manages to fix the flaws mentioned above in a redesign, the system should become a stellar hit.