I passed my test in 88 and drove in holland in 2000 on an old style paper licence but things have changed since then you can check for the country you are going to
However, car hire companies are not obliged to abide by the same rules that the Spanish police and courts have to. You might experience difficulties with hiring a car from some firms in Majorca.
I hired a car in Italy in 2007 with a very dog eared pink paper one missing its front page with no problems. The hire companies photocopy your license whichever type it is. To avoid any possible problems however, I have exchanged it for the new (2 part) one.
I have an old pink licence which has come apart at all the folds, so it's actually just a scratty pile of paper. I've never had a problem with car hire companies, or the police here in Greece.
I also didn`t have a problem in Greece in 2006, but I as I said & Ethel suggests, the new type will be acceptable throughout Europe & may save some inconvenience with some officious jobsworth.