Both. If you don't own a 3DS yet, you should buy one anyway; it's an incredible system with a huge catalog of great games.

Looking carefully at the cartridge when they slide it in (0:53 in the video), it looks to be perhaps twice as thick as the 3DS cart. But it would be very easy to make both go in the same slot, just make the new carts ever so slightly thinner. I can't see if the controllers have all the 3DS controls, but it looks like it's at least close. And a modern chip, with the option to be at least partially designed for the task, could easily either emulate or ship with hardware support for running the 3DS, which still is not that powerful in modern terms. Losing the 3D support is all but a non-issue in practice. I don't want to predict this is the case, but I see no major technical reason why this couldn't run 3DS games fully backwards compatibly.

The only thing I can't see is whether the screen is a touch screen, which would be necessary. Which may also preclude using 3DS games in TV mode. (Unless they do something weird with Wiimotes or something. But I'm not sure that would play well enough to be worth doing.)

If it's backwards compatible with both 3DS and the WiiU, and perhaps even the Wii, this thing will come out of the game with an absolutely killer lineup. ('Twould be a pity there would probably no way to port the physical disks that you already own across, though. The 3DS games would just slip in, so they'd have an ironic advantage over "real" Wii games.)

To me this seems like an entirely new console, actually. I wonder if this is the "Nintendo NX" they were talking about or if that was only the codename for this project...

Yeah I was wondering about this too - will the 3DS be carried on and essentially be the low-powered option?