Simple answer :
They run out of money.

Yeah, Sega would have gone bankrupt had they stuck with the Dreamcast. Sales were dead, both software and hardware, and third parties were canceling their DC projects left and right. There was nothing else that Sega could have done.

If they would have had some more $$$ in their pockets , than yeah , they could have made it probably , and maybe we would see even a DC2 ... but I heard that they didnt had enough resources to go on :(

Sega was 2 billion dollars in debt when they decided to stop DC production. They had no choice. They had been trying to sell themselves to Nintendo but Yamauchi turned them down. I mean the Dreamcast was half as powerful as they originally intended because they in financial trouble. I wish Nintendo would have bought Sega or Sega would have allowed themselves to be purchased by MS because Sammy has ruined Sega as a company.

Yes they did! It was selling as fast as the Gamecube, and Xbox, or faster, when it launched. They should have kept it in the race. Who knows what it could have become today.

No.

They actually probably could have been in 2nd place easily seeing as they had over 10 million sales but from what I understand they were losing a lot of money and didn't want to risk it.

I just want to say that I loved my dreamcast. I really miss the Sonic games and I would love a Sonic Adventure 3, Shenmue 3 etc..

In my opinion they pulled the rug out of Saturn to early. They were winning Japan until they started moving there big titles to DC (VF3, Shenmue, Virtual On 2) and pretty much stopped hyping Saturn software (Panzer Dragoon Saga, Shining Force 3). If they'd've kept those titles on the Saturn, and advertised them properly, they probably could've maintained their lead until 98. I think they could have gotten about 2 or 3 million extra consoles sold from 98 and 99 in just Japan.

Now, in the west, Sonic Adventure was really all they needed to get back on track. If they could've gotten Sonic Adventure out the door in time for holiday 98, along with Shenmue, Sega Rally 2 and Virtua Fighter 3, they could've done much better. I'd go so far as to say that Sonic Adventure would have been worth about 2 million extra Saturns in America and about 1 million extra in Europe.

If they'd've kept it up (House of the Dead 2, Grandia 2, Sakura Taisen 3 and so on) and launched DC in 2001 with Sonic Adventure 2, I'd say they'd still be in the business today.

Ironically it is exactly the same thing MS have done with the original X-Box and Sega did with the Saturn, kill them off too early so they can get their next console out 1st.
Both had great starts but after the competition came, sales dropped alot but the only difference is MS has money otherwise a much smaller company would of gave up on the 360.