The square-circle-cross-triangle buttons are a little small, but they haven't given me any problems. The shoulder buttons are fine and the D-pad is great. I agree with @yadilie though, the select and start buttons are terrible. They are not only tiny, but they are recessed for some inexplicable reason, and that makes it hard to press them. Thankfully, you don't need to very often. I have no problem with the home button because it's a bit larger.
I definitely thought it was a joke. I actually think the idea of a non-3D 3DS is a good one, but man is that thing ugly. Also, the name is terrible. It's the sort of name that should have been brought up in the first round of marketing meetings and then immediately dismissed.
Some variant of this will be said, repeatedly, this holiday season: "I bought my grandson this 2DS, but I can't find any games to go with it. There are lots of 3DS games, but he doesn't have that one..."