Pichu has really become quite the hot topic, hasn't he?
To the argument that there are better characters in the Nintendo library to pick from than Pichu, I would say the same could be said about Jigglypuff. She was pretty much the second mascot for the series in the Red and Blue days, but has lost pretty much all relevance to the Pokemon franchise, these days she's just another of the 600+ critters. And if she hadn't been in any previous Smash games, I don't think too many people would be arguing in her favor as someone who should take up one of the character slots.
But Jigglypuff has been in the Smash games, and enough people like her FOR HER PLAYSTYLE that the idea of getting rid of her would be regarded as heresy on these boards. Pichu was in Melee, and it's a safe assumption that people didn't get attached to him because of his complex and fascinating personality, but because of his PLAYSTYLE. Presence in past Smash games, while not automatically enough to make someone a valid choice for P:M, is something that gives characters some degree of precedence when thinking about who should be included.
Pichu added a niche gameplay style that hasn't been able to be filled by any other character. I believe this is the most important thing to consider in regards to all this. No, Pikachu doesn't even come close, and that's fine, because Pikachu is Pikachu.
I feel I should clarify what I mean by gameplay style. I'm not strictly talking about the self-inflicting damage thing, though that is undeniably a part of his identity. What I'm talking about is the way the character FEELS to play as, the brand of momentum specific to that character. The tactile sense of movement. To me, that's a bigger part of Pichu than even his self-inflicting damage, and is what makes him fun to play as. I can only assume it's the same for other people who want him back.
There are plenty of arguments against him besides this, some very valid ones, but I don't want to sit here writing too long of a post. I just wanted to get this out there because it seems like there are some who don't understand WHY people want Pichu back, and I wanted to explain the reasoning.
On another note, if an Advance Wars character is included I'd prefer if it was one of the grunt soldiers instead of any of the commanders.