Hey Vamp,
I wondered the same thing not too long ago. I ended up with the IPAC4, and just received it this week. I went with the 56 inputs vs. the 32 because I'm planning for the future... I believe the difference between the IPAC4 and the IPAC2 was about $25.
Something you may not be aware of, and I only just learned recently; a joystick has 4 inputs, more if it has a trigger and/or buttons. So, if you have 2 regular 4 input joysticks, 7 buttons per player, 2 coins, 2 starts, pause and esc/exit you are up to 28 right there.
If you have the space, and may plan to add a flight stick (a la Tron) w/trigger, (with optional 1-2 thumb buttons). That would be another 5-7 more inputs.
If you ever plan to add pinball, as I do (though I've not had much luck getting it to work well), you might want to add 2 flippers, 2 nudges and a plunger. That would be another 5 inputs.
If you know that none of that stuff will happen, and you are looking to keep your buttons to a minimum by using shift functions as previously stated, I'm sure you could get away with an IPAC2.
The answer to your main question...."Can I use it even though I don't plan on having 4 controls and have button commands linked to the place for p3 up, down, etc", I am not sure of, but I'm assuming so! It just might require more mapping in software, I guess. Hopefully someone will chime in for the both of us.