Regarding the whole "PDA thing is cool but isn't an adequate substitute for pausing" thing, I think Yahtzee sort of has a point. However, I think what this really shows is that Nintendo is looking back to past failures and trying to build a success out of them.
Look at GBA-GC connectivity. Four Swords Adventures was a great game for single OR multiplayer and it used the dual-screen system quite well in allowing people to enter rooms and caves without all having to do so at once, but the need for a GBA and a cable for each player made it expensive and inconvenient to get a four-player game going, not to mention the original GBA's screen sucked.
The same thing with Crystal Chronicles, letting each player have their own inventory really added a wonderful layer of depth to the game. Where it ran into issues was with the shortage of buttons, lack of analog control, and clunky menu navigation. However, the supposed Project Cafe controller HAS more buttons and dual-analog sticks, not to mention a touchscreen would really help to lessen the difficulty of navigating a menu mid-battle.
In all, reusing this idea but with a lower cost of entry and more convenience, as well as building it in so that other developers will be more likely to use it, is a fantastic idea as far as I'm concerned. Sure, some developers will misuse or abuse it, but hell there's always gonna be someone who can't make decent control schemes, even on a traditional controller (see: about a third of the NES games that AVGN has reviewed).
Instead of merely passing it off as a pointless gimmick, imagine the possible uses for it: Card games can hide players' hands, sports games can hide plays, people can solve puzzles separately in a cooperative game, players can manage their own inventories or spells without everyone else having to pause, and command menus don't have to clutter up the main screen. That's just off the top of my head, I'm sure there's more.
What it boils down to is that this is Nintendo catering to the crowd that they've been serving since the N64: multiplayer. They were the first to have a console with four controller ports without the need of a multitap since the Atari 5200. They released the first handheld game system with any sort of remotely decent online play capabilities. They've launched series after series designed with multiplayer in mind (Mario Part, Mario Kart, Smash Bros, etc). While I don't doubt that this new controller has its uses in single player, I'm almost positive that they were thinking of multiplayer games when they made it.
P.S. Thanks
P.P.S. I hope they remake Pac-Man VS for this system, and sell it as a low-cost downloadable title.