Sega eventually came around with the Sega CD but it was too late when they released Sonic CD. That game could have been done, other than music, on the Genesis but they kept it on the CD attachment. It showed what Sega could do if they wanted - Sonic with tons of levels, which is what gamers wanted.
It is a shame that more companies didn't take advantage of that additional storage. I mean, many did but it was just for intros and outros or better music. Where were the improved animations, more levels, etc? I understand they were limited by that transfer bus but that didn't effect EVERYTHING they could have done as content was loaded into the RAM first (though again, Sega screwed gamers by skimping here as well).