<mx:DataService> fully supports Flex 3.
First go to your Flex project properties > build path >
properties, and make sure the fds.swc and playerfds.swc are
correctly linked - they should be if you used the project wizard
correctly.
<mx:DataService> is under package mx.data.mxml.
As for LCDS vs BlazeDS, LCDS supports data management
service. The data management service use a model oriented approach,
which is ideal for data driven, collaborative types of apps. It's a
bit difficult to explain in one sentence since there's nothing like
it on the market, but if you vest some time ramping up on it, it is
guaranteed to save you time down the road.