Heh. I don't use DataSets at all as they seem too clunky and prohibitive to me. I generally use DataReaders and loop through them or, if I need to, load them into a typed List or array >:D It's much faster, even taking into account custom persistence libraries. I have all this abstracted into a library that I reference in all my projects.
3-tier is alive and well. And yes, the data layer does actually refer to the code that knows about the datastore. 3-tier is about separating the code for model, view, and controller so that each is modular and changes can be made to any one of the tiers without any need to make changes to the others.
For large applications, DataSets quickly become a performance liability and should really just be avoided. There are much better tools available for data access and persistence such as DataReader and any number of persistence libraries (e.g. NHibernate).
Happy hacking!