S2TC compressed textures have the very same size as S3TC ones. However, as some bit combinations are unused, they deflate better. For example, a Xonotic build can get reduced by 12% in total size by using S2TC instead of S3TC.
In theory, S2TC files have exactly 25% less entropy than S3TC files, and thus an ideal compressor can yield 25% smaller compressed archive size. But, of course results may vary by other properties of the compressor and the archive format.
A good S2TC compressor is in quality about equivalent to a bad S3TC compressor. See also: QualityComparison.
All current graphics cards can decompress S2TC, as S2TC is a special case of the well-known S3TC texture compression format.
No, it can not decompress S3TC, as the S3TC decompression algorithm is not implemented. When a "reserved" bit combination (i.e. one not defined in S2TC) is encountered, the decompressor instead selects - at equal probabilities - one of the two possible color (or alpha) values. This yields reduced visual quality, but accessibility/readability is not impaired. See the libtxc_dxtn page for a screenshot.