Honestly, I'd say it started to go downhill with the first Sonic Adventure on Dreamcast. Sure, it wasn't a bad game, but it laid the groundwork for the crap we get today. It introduced all of Sonic's new annoying friends beyond Tails and Knuckles, and forced you to play as them. It brought the series to 3D, but in the transition had to take control away from the player for a lot of the loops and such. Finally, when the game's in 3D, with how fast Sonic runs, they have to build a loooooong level, which is easier in 2D, but in 3D to make the game longer than a couple hours they have to slow it down by putting in character interaction and non-sonic characters and gameplay mechanisms, which in a Sonic game, very few people want to play. So overall, Sonic Adventure wasn't a bad game, but it really signalled the beginning of the end of the Sonic franchise as we know it.