Their 2D games blew everything else out of the water. I think if Sega had of powered on with some quality 2D games, especially an awesome new 2D Sonic game, things might have panned out differently. People might have seen the 'jaggies' and jerky gameplay for what it was in favour of titles like Radiant Silvergun, X-Men vs. Streetfighter, and Castlevania X.
Not to say that they should have abandoned 3D game development altogether, but I think they could have staked out a niche market and blaze their own trail.
A new Sonic game was definitely lacking. Sonic X-Treme got canned and Sonic 3D Blast was a cop-out (and it wasn't by Sonic Team, either).
Some other awesome Saturn titles:
NiGHTS into Dreams
Panzer Dragoon II (Get Panzer Dragoon Orta on XBox, it rocks)
Virtua Fighter II (seriously, this game is way better than Tekken)
Burning Rangers
Steep Slope Sliders (I still haven't seen a better snowboarding game, gameplay-wise)
Virtual On
Winter Heat & Athlete Kings (the best sports games ever, IMHO)
Virtua Cop 1 & 2
Man...what a great machine. The funny thing is that all of my mates would say the Saturn sucked and the PS ruled, but everyone preferred to come over to my house to play videogames...