This has been a sort of recent discussion on the Sega forums- Sonic the Hedgehog's "canon" story. Not that there is much to begin with, but lately, Sonic Team's been just going off in random directions. But it seems as if there are two separate GAME continuities running right now. This diesn't count comic books, cartoons, whatever, which are all separate.
Start with the Genesis games. Move on to the Sonic Adventure series, Heroes, Shadow the Hedgehog, Sonic 2006, the storybook Wii series and Unleashed.
Second canon? Ooh... probably started with Sonic 1 for Master System, ported to Game Gear. Basic rule seems to be that anything on the handheld systems is separate from the consoles. Mostly. The Sonic Advance games seem to replace Adventure in this canon, with Sonic Battle and Sonic Rivals following up. This canon seems to "officially" exist with Bioware basing Sonic Chronicles almost entirely as a sequel to Sonic Battle, which itself was a sequel to the Advance series.
Things tend to pop up in one game that are never referenced again. Contradictions happen constantly. The real deal breaker here is Blaze the Cat. In Sonic Rush, she's a princess from another dimension. In Sonic 2006, she's from the future. This isn't really possible within one canon. Not to have two separate but the same characters. Eggman Nega is another- in rush he's from another dimension. Rivals, from the future. Then Silver shows up in Rivals again.
Rush can't fit in with Rivals. Forgoing goofy explanations, and Sonic 2006's erased events ending, it's possible that two Blaze the Cats exist separate. Ignore HOW they exist.
Sonic Heroes contradicts Knuckles Chaotix. Charmy is 16 in the KC instructions, but is only 6 in Heroes. The Chaotix have never met Knuckles. MAYBE this old game takes place more recently?
Rouge the Bat. Two different personalities. In the console canon she's mostly intelligent and actually takes her job as a secret agent seriously. In the handheld canon, she's written as a creepy pedophile who flirts with numerous underage boys, she has no brain whatsoever and is always thinking about stealing stuff. It's why people draw gangbang pics of her, because she behaves like a total whore. In short, the handhelds treat her as most any Japanese game treats women.
And why has this happened? Because Sega kept crapping out Sonic games. They hired other companies to make them. They've put out, since and counting Sonic Adventure, 10 console titles and 9 handheld titles. 19 games in about 10 years, not counting re-releases or compilations. No thought to the story, no tought to making the games of quality, just rush them to market. Not that this is new... the Game Gear titles, Sonic Fighters, etc. Put out a game with a meaningless story and hope no one notices.