I personally love the Paper Mario series (notice my avatar), with Paper Mario 2 being my favourite game ever (until I get Super Paper Mario). And I personally heavily agree with the fact that he should be in - replacing the redundant Dr Mario. For all those people who think Paper Mario will be just like main-series-Mario, I urge you to actually PLAY the Paper Mario games and understand the differences. Firstly and foremostly, Paper Mario has a hammer - and some might say that so did main-series-Mario in Donkey Kong and Superstar Saga - but the thing is, the main-series-Mario in SSBB definately won't have a hammer, so, in this way, Paper Mario won't clash with the normal Mario.
In addition, Paper Mario has neither fireballs nor a cape, so he would probably use more Paper Mario styled attacks in their stead (eg hammers, etc.)
Paper Mario's physics are very different from normal Mario, Paper Mario is more floaty, but with a LOT more traction, and, I think (at least in Super Paper Mario), he has a higher jump.
Plus, he would have inventive dodge moves, like turning sideways or someting.
His up + B move might be turning into a paper plane.
His dair (downwards aerial A) could be his spin jump.
He could use his tornado jump (Paper Mario veterans will know what I'm talking about!)
etc... I personally think Paper Mario could make an excellent addition to the SSB franchise. He would definately, as I have explained, be different to Mario.