Exactly! They had an amazing formula, a character that could do more than just 2D side scrolling games, support group full of characters with charm and character and all they really did with it was more 2D side scrolling games and Dr. Robotnik's Mean Bean Machine (which I preferred immensley over Kirby's Avalanche because of the characters).
Sadly we had to wait till the Saturn to get a game outside 2D side scrolling that still used Sonic's abilities. Sure, Sonic Spinball was a cute pinball game but it was quite simple and still had to have 2D side scrolling action elements. Plus, when you see the bonus levels and there is a reflection of Sonic in the windows, it makes less sense - Sonic is playing himself in a pinball game? In the evil world that Robotnik has made they still have recreation areas?
Sonic R was neat but again, Sega felt they had to include action segments instead of focusing on Sonic's speed.
Sonic 1 was the perfect showcase for Sonic's abilities, the first time you hit a loop was life changing for gamers. Sadly, Sega went downhill with Sonic after that as they tried to turn Sonic into Mario but with short speedy areas.
Sonic is a great example of not knowing how to handle the fame when a hit comes along.