The analog stick alone makes DS much MUCH better.
I don't get it.
You can use the circle pad with any regular DS game (even those played on a flashcard). It won't register analog movement (soft or hard presses) and it will still function with 8 digital directions, but the smooth feel of the circle pad improved most DS games immensely for me. Plus it's much easier to pull off diagonals.
Anyways, to the TC- I can't speak for you but i upgraded from a DS Lite to a 3DS and found it worth it personally. The only caveat is that DS games will be slightly blurrier due to upscaling to a higher resolution (you can play DS games in original resolution but the view will be very small). I didn't mind this blur at all though, it's only really noticeable if you know exactly what the games should look like anyways IMO. I made a basic comparison on what the difference is-
I wanted to play 3DS games however, so i didn't have any reservations in going from DS to 3DS. If the 3DS library or its future strikes any interest with you, i say go for it. You'll be set for the future if you ever want a 3DS game or whatever, and it will do everything a normal DS will do (sans anything requiring the GBA slot). Though i will say the obvious in that redesigns are inevitable if you'd like to wait for a while to see what a newer remodel of the 3DS might look like. That's entirely up to you however. No telling when such a thing will happen.
As for flashcards and Nintendo blocking them, that is always a danger you're going to face and it will likely happen. The most recent update that arrived several days ago did indeed block most popular flashcards. The more popular ones are fixed very fast however. I own a Supercard DSTWO personally and they had an update out to bypass the flashcard block within just a couple of hours. The trick to dealing with this is to get one from a good and responsive team like Supercard (DSTWO is a great cart and considered by many including myself to be the best one currently out, Team Supercard has been making cards for quite a long time).
You should avoid updating the 3DS itself until you're certain your card is in a state where it will work with the latest 3DS software. If it's not, just play it safe and avoid updating the 3DS until you've updated your flashcard with a fix. Though as someone stated, the DSTWO has some extra hardware inside where it can actually update itself even if the 3DS software blocks it. I haven't ever tried it (i've always just waited to update the 3DS until my DSTWO was guaranteed to function properly), but it's said to work as long as you follow the instructions well enough. Another great advantage of the Supercard DSTWO. What Technicmaster0 said is apparently only true if you don't follow the proper steps, like turn the system off or mess around with the card while it's updating (which has a chance of bricking your DSTWO). There's a guide in regards to this in this thread-
Some flashcart dealers also sell DSTWO's with the latest firmware already flashed to them. I got mine last year from Modchip Central, they pre-flashed it to work with the latest 3DS software at the time. And it did work fine when i got it. You can contact them to see whether they do this for the newest recent 3DS update as well.