So Todd van Luling of the Huffington Post did an article about Michael Jackson's involvement with Sonic 3. And confirmed that he did work on the game's music and that his work was put into the game:
The rest of the article is about what the community had already found out and how Jackson worked on the game. It's definitely worth reading if you care about this stuff: http://testkitchen.huffingtonpost.com/michaeljacksonsonicSega maintains it never worked with Jackson on Sonic 3, and is "not in the position to respond" to questions about allegations to the contrary. "We have nothing to comment on the case," the company said.
But the men whom Sega credited with writing the music say otherwise. Six men -- Brad Buxer, Bobby Brooks, Doug Grigsby III, Darryl Ross, Geoff Grace and Cirocco Jones -- are listed as songwriters in Sonic 3's endgame scroll. Buxer, Grigsby and Jones tell The Huffington Post that Jackson worked with them on a soundtrack for Sonic 3 -- and that the music they created with Jackson ended up in the final product.