I guess there are also significant inconveniences in production for high quality animated sprites.It's not just the ugly 3d games that bitter me most. Is that the industry at large abandoned 2D just when it learned to do it well. It was at the end of 16bit era that studios developed the art pipeline, tools, knowhow, and budgets to really replicate near TV/movie quality animation on those machines. Then they left all that behind.
One of the best 2D work to have ever been done in a game I believe was in King of Fighters 12.
This quote from Wikipedia: "Kukino addeds that each character took between sixteen and seventeen months to be done by 10 designers together along with Nona, who revised them. However, due to the difficulties that it took to make this new designs, there were only 20 playable characters for the arcade version, the lowest number ever in a game from the series."
Indeed these characters were very well made and very smoothly animated. Creating every single frame of animation with proper shading so that characters would not seem out of place in various situations on each stage must have been a pain.
I suspect this is why Street Fighter III also had very few characters. The animation was top notch. It probably has the smoothest 2D animation in every fighting game to date.
Guilty Gear XRD choose the more efficient solution by designing 3D graphics with advanced cell shading, zero camera perspective on characters to make them look like 2D and low frame animation placed exactly where a 2D sprite would have been.
2D hand drawn graphics have a special charm though which I also wished had more widespread use.