Ugh, so why isn't this collection including Budokai 2? Was there something fundamentally wronger with that?
B2 is really just a worse Budokai 3. Budokai 1 at least has some differences with what specials are available for characters (lots of the side characters have similar special moves, for instance in B1), the story mode is cool, the What-If story mode scenarios are cool, and it's the one people praise the most for its story mode. The only thing wrong with B1 is the combat and that's due to it being the first in the series.
B2... let's see.
-Story mode is a board game, people hated it. It was an alternate universe kind of story which... no one really seemed to like.
-Visuals aren't as clean as B3, it was the first to introduce cel-shading, however.
-Ultimates included having the players spin the sticks (otherwise burn your palm of your hand) to win (defense or offense).
-Pretty much has the same roster as B3 minus some characters that B3 introduced.
-Ki system is still not perfect
-Fusion system introduced but it is also quite ass (barely any time at all for Gotenks/Tiencha), save for the Potara fusions
I think that's about all I can think of that was wrong with Budokai 2. Budokai 1 has its issues with the combat and Ki system as well but what makes it different enough from B3
is the lack of those features and also how much different the combat plays out. Budokai 2 is really just not as well liked. Aside from the What-If fusions, there's really no reason to play it when you have Budokai 3. With Budokai 1, there's multiple reasons to play it, from Story Mode to certain special moves only existing in that game to certain transformations only being in that game (Super Vegeta/Super Trunks for example).
Had it been decently received, I'd think it would be included. But nobody seems to like it that much (though I guess it wouldn't have hurt to include it anyway).