This is currently being debated in the UK, details here.
The argument is that a shorter course would lead to much less student debt (at a time where fees look set to increase substantially). Plus, it is argued that there is much "dead time" such as winter, Easter, and summer holidays which could accommodate a full year's worth of instruction. There is also a UK university, the University of Buckingham, which does offer degrees that can be completed within two years.
The argument against is that the above view makes the mistake of thinking all lecturers do is teach. While a necessary and important (perhaps amongst the most important) aspects of their jobs, academics have a wide number of other tasks. These include submitting applications for funding grants, conducting research, and also the many administrative (and quality control) bureaucracy. These aspects of the job are performed in between lectures: if a three year degree were collapsed into two years, then academics would have much less time to apply for grants and conduct research.
I think the argument against is the clear winner. If universities are to be places where students learn about the latest developments in their chosen field, then it is necessary that they are taught by persons who know these developments and who contribute to them. This is difficult enough with the long working weeks at present, but may be next to impossible if time for research was curtailed even further. Those who believe universities should all offer two year degrees may condemn much of British higher education to being a place where British academics teach students about the research that happens everywhere else. If Britain is to remain a leader, then its academics must have the time to conduct research.
One of the biggest mistakes we can make about academic life is believing that academics only work when they are giving lectures. This is manifestly untrue, although it is perhaps the side of academic life that the public is most familiar with. It may then be incumbent upon academics to explain more about the myriad of tasks undertaken are beyond teaching and argue for their value in order to shake off the possibility of yet another major change in higher education policy.