Yeah, it's that the 3DS has much smaller pixels than the DS screens, so when the 3DS blows up the DS game image to the 3DS resolution, it's blurry. You can start a DS game in the original pixel size by holding Start and Select when you start the game, but it results in a very small image being displayed. The DSi and XL both did the same thing, though to a much smaller extent. Both had larger screens, but compensated by using larger pixels, thus a somewhat blurry image. This is just an amplified version of that.
I noticed it at first, but it doesn't bother me anymore.