To me, it seems like they threw away all its strengths in an attempt to get rid of its weaknesses. There's absolutely nothing exceptional about the game except the eye candy, and at the time the DC games had awesome graphics too. They still do, honestly. The teams just get in the way, I find myself using the speed character 90% of the time. Further, the controls are quirky, and after playing SA1 and 2 for hours on end, I can't stand the SH controls.
I think they would have been better off combining the best elements from SA 1 and 2 to balance a sequel. Knuckles could have combat levels like Gamma, for starters. Tails could see levels similar to Sonic/Shadow, but perhaps not quite as fast paced and involving his flying ability (though not in a totally pace-killing fashion forcing you to fly from block to block straight up, ala Sonic Heroes). Things like that.