Yup; wireless connection is needed for the beginning of the system transfer.
Some GAFfots have said that their Gamestops let people buying the XL, then come back with the 3DS to get $100 in trade-in credit, but the store I went to said they wouldn't do that. But who knows; Gamestop employees didn't know that they were supposed to offer free copies of Steel Diver or Pilotwings with the systems, either. -_-
Shaka- take following steps:
1. Make sure that the firmware is up to date on both systems and that each is plugged in or fully-charged.
2. Copy the contents of your 2GB 3DS SD card to the 4GB SD card that comes in the XL.
3. Put the 4GB card into the old 3DS and leave the XL empty.
4. Start the transfer process.
5. Press "OK" on 40 different menus.
6 Your shit will copy over. It takes a while.
7. At the end you can take the 4GB card and put it into the XL.
8. Your original 3DS will be restored to factory settings.