In the late 1990s, a lot of the market was "all 3D, all the time" and saw 2D as an anachronism. That's probably why Sony didn't want to do 2D. They had something to prove and didn't want to be seen as a has-been. Remember that a lot of people then saw 2D as being just old and janky, retrogaming was in its early years and old games you'd find in a clearance bin were the ones in 2D.
I started playing video games in 1998 at age 5 and didn't want anything to do with 2D, the first game I ever played was Super Mario 64 so I guess it set my expectations high. Wasn't until the mid-2000s that me (and many others) began to appreciate the old 2D games.