Lucas was telling a story in the 1977 movie. In Phantom Menace, he had no story to tell, just effects to show. It had no heart and no emotion.
Yes, they are planning on releasing all the movies in 3D. Don't worry, they will make more than enough money to justify it.
For what it is worth, I rank them in this order: Star Wars (IV), Empire (V), Revenge of the Sith (III), a thousand feet of #!@^@, Return of the Jedi (VI), another thousand feet of !#%^!^, Attack of the Clones (II), ten thousand feet of #!@^@^, Phantom Menage (I).
A friend of mine noted that the promotional posters for Phantom Menace in 3D very prominently feature the relatively minor and grossly underused character of Darth Maul. He said, "It is almost like Lucas is saying, 'we fooled you once into thinking this would be cool... can we fool you again?'"
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-Jason "I doubt I will see it in 3D" Evans