"Do people really still think that babies dont feel pain?" - quite blatantly from the article people think that babies DO feel pain.
"So when my DS is laughing his head off at me or DH hiding from him, no he isn't really happy at all is he?" - This statement has nothing to do with the study that the article is talking about. Are you sure you didn't just read the title?
"I disinctly remember DS having to have bloods taken from his heel to test his jaundice levels. He was screaming and screaming. Obviously he felt no pain there." - Of course he felt pain! - the article clearly says that they USED to believe that babies couldn't feel pain. People also used to believe that the earth was flat.
I really wish that people would read an article about a scientific study (or better yet read the actual study) and then take a moment to reflect about what is actually being said rather than jumping to incorrect conclusions from the title.
I think pushmepull you has given the correct interpretation ot the article.