MK2 all the way, I can´t count the hours I poured into it playing against my brother. MK3 was cool when it came out, but the Fatalities were a massive step down from those in MK2. They were stupid compared to the simplicity and crudeness to most MK2 Fatalities (still Mk is the best in this aspect as they seemed more "real"). Squishing your opponent with a MK arcade machine? Yell at them so their soul leaves the body horrified and escapes running? Turn into a giant and step on them? The animalities were also lame.
The fighting system in MK2 was much better, it relied more in outsmarting your opponent and resulted in much more fun and interesting fights. In MK3 reflexes and good inputs were everything and one good combo could take almost half your health bar. You just needed to attack as fast as possible hoping that your opponent wouldn´t be able to react in time. The roster was much more balanced in 2 as well, everyone had their tricks and was usable: Kitana was the queen of air battles, Scorpion (offensively) and Baraka (defensively) could dominate both air and ground, Sub Zero and Shang Tsung were great zoning characters, Mileena was a purple blaze, Liu Kang could rush or fight from far, Jax was a beast in close quarters but also had some tricks for long range, Reptile was the weirdest and had the most surprising tactics... In MK3 however, there were some overpowered characters like Liu Kang and Kabal which couldn´t be matched by anyone else and other useless characters.
I love both games, but there´s no kontest.