I'm of the opinion that not everything was bad with the controls and some things can be improved upon, but i also agree that Sonic needs to be rebooted in the style of Sonic 06. The game was full of bugs and nearly unplayable, but the way Sonic and friends were portrayed is the right way to bring Sonic back.
In an ideal world, SEGA should hire Yuji Naka and Prope to assist in the development of the next Sonic game. That is the only realistic way he can be saved. Execs need to stop worrying so much about losing face and need to worry more about making a sucessful brand.
Didn't they try this with Shadow and 06's stories but fail miserably? Personally the childish approach doesn't feel like it would be that much of a deterrant. A serious Sonic storyline reminds me too much of the Sonic Archie comics and those are just filled to the brim with unnecessary and unmemorable characters.
I think the problem here lies with how do you make a new Sonic Adventure with functional controls. Lost World was quite clearly an experiment with the walk and run buttons and I feel for the most part they work but at the expense of an overall sense of speed the franchise is known for. The Sonic devs are really stuck between a rock and a hard place at the moment for the inevitable next Sonic title.