I did get to play it when it was new (the Saturn), and the catalog I encountered was shitty FMV games and a shmup. I was not enamored.
The Dreamcast though, I remember being very attractive. The demos of Sonic Adventure looked absolutely astounding to me. I was late hopping on to that gen of consoles (parents strapped for cash), and still given the choice I went for the PS2, because it had the more attractive catalog and a DVD player. Years went by and I borrowed a GC to play Prime, an XBOX to play Ninja Gaiden and Halo, but I was not that motivated to try the DC.
I'd rather be the creator of the worst thing that people want to buy than the best thing that nobody's ever heard of.
This is all to say, your opinion clearly isn't the universal one.
Although I will also say that they must have known that a lot of kids would already want another Sonic game, so not having one at launch was a mistake. No need to steer people’s opinions if they are already in a convenient place.
Sega also had tons of mindshare. They fumbled the ball and Sony ran with it for a touchdown. End of story.