I hated that mentality back in the day. I think that sort of limiting mentality fucks variety for us all. We could have good things, it's just asshats( with a skewed perception of how they think the world should be ruin it for the rest of us. It's one of the reasons I loath trends. And I don't think 2D was any threat to 3D. Cue the "What can't we have both" girl, because 3D was going strong. It would've just allowed more exposure of 2D to gamers who, hell, if given a fair chance, might've actually developed some appreciation for the style rather than being conditioned to be "all 3D, all the time!". I don't doubt that whole "movement" back in the day resulted in some of the kiddies to come afterwards being so negative towards anything 2D. At least in the recent years, some of those kids opened their minds to different gaming experiences, which is why there is a new found appreciation for the 2D/retro style.
As painful as it is to defend a policy that hurt me, I don't think hardcore fans understand how brutal a console war can get. These consoles might not have gotten where they did without some tough decisions...
Instituting policies that limit your software so that you can present the best image of your console has been with gaming from the earliest days. Back with Atari 2600, the company refused 3rd Party license (though they had other reasons for that, most all of those reasons based on $$.) When they did open up the console, a flood of cheap and low-quality software killed it. Nintendo instituted its Seal of Approval system in response, and it always limited publishers to certain numbers of products and markets in order to control the slate calendar and quality image of its console.
PlayStation has had its policies for different reasons, but it was the same goal: it seeks to create an image of a high-end, fully-immersive machine, and 3D graphics were the key selling point in kicking off that revolution. SEGA fought to compete, but because of the difficulties of that system the Saturn was left trying pump itself up as a "2D beast", yet look at how much good that did Saturn and how little the praise for how great the Saturn RAM chip was helped communicate its virtues. Even further on, when PSP was being accused of being a "port machine" at launch, they put in policies that combated that image. (For the most part, you can't just say, "We don't want your game on our console", so they create rules that they think will funnel developers in their direction, and if only a few games are big enough to ask for exception, they can figure out a stipulation that can allow it without breaking their relationships.)
We're on the other side of the policy-based console image shaping now, and PlayStation and Xbox are actually suffering an identity crisis because of how indies have taken over. Granted, the drop-out of the mid-tier game market (as well as the complications of adjusting to rising quality standards) has meant that only AAA-attempting games actually reach stores and so fewer games are being made in select genres compared to previous years. But when you look at comments on PS Blog for example every time a new game is announced, kids rail against the influx of indies and demand developers go back and make them some more Uncharteds or whatever they expect more of. Nobody's saying "no" on iPhone or Android, and although there are sales there, there's no identity to connect to. Nobody ever said "no" on PC either, but if you think about the game shelves where you went and bought those games, you know that store clerks cultivated an image of "PC gaming" where a master control did not exist, and even though some products sold bananas (like kids games and cheap bundles and such,) they were not placed on the same shelves because the standard had been set (some might say by the console companies) as to what promoted product would make for an aggressively interested customer base. Nintendo and PlayStation cultivated a certain market with their boxes, and as harsh as their choices were sometimes, it was effective (fiscally, at the very least, but also I'd argue it had a quality effect that encouraged game designers to go after the audience it was drafting.)
Later in the lifespan of their systems, Sony always relaxed its policies, but unfortunately for some of the early software in those formative days, it was too late. Hits ultimately are what define the image of your console, but in order to have hits, you have to clear the path for them to arrive and deliver.
(BTW MagnaderAlpha, you argue that the lack of 2D "resulted in some of the kiddies to come afterwards being so negative towards anything 2D", but I promise you it was the other way around back in the day. Sure, there were devotees, and maybe there were games in the pipelines that could have helped convince kids the way there are now, but when PlayStation was coming up, 2D was considered an insult to a lot of gamers' idea of 'quality' production values. Sony never officially told the kids that it was against 2D, the kids told Sony, loudly and clearly.)
