Not my area of expertise, Marquis talks about MBA recruitment issues at length. My guess is that undergrad GPA plus a variety of academic factors (eg, major, transcript, etc) play a large role in the admissions process. A 730 GMAT helps but won’t completely factor out the 3.2 GPA the first two years. The best way to spin this, if the issue arises, is to explain how the transformation in your approach to studies took place. Provide a good story, and then emphasize repeatedly the positive results that have come in the intervening years.