I was just playing some Sonic the Hedgehog 2, and I started thinking, "Damn, whatever happened to Sonic." He had these great games on the Genesis, but never made the proper transition to 3D.
I think the main reason why Sonic never really worked in 3D is extremely simple. Sonic is built around speed, not exploration. The Mario games were always built around exploring every nook and cranny of the game world. Sonic was meant to be played at a breakneak speed, and it really wasn't meant to be played in a way were you explored every nook and cranny. You could play that way if you wanted to, but it really went against the spirit of the game.
With the move to 3-D, exploration comes natural. Running around at breakneak speeds really doesn't.
So I think that Sega should have either
A: Made the 3-D Sonic games focus much less on the whole speed aspect of Sonic, and make them more exploratory
or....
B: Just continue to make 3D Sonics!
Obviously, I would prefer B, but the focus groups and marketing departments would say that 2D games just wouldn't sell in todays modern gaming industry.
Of course, there is a game called Viewtifull Joe that has alot of people excited.