Rare had been on a slow decline after Conker's Bad Fur Day came out. Nintendo dropped them at the right time, Microsoft picked them up at the wrong time. Without Nintendo's iron fist guiding them, the studio just kind of... fell to pieces. Not really Microsoft's fault, certainly not Nintendo's. It just happens, sometimes, with studios where the creative input of a few people can be really that important (like all those guys who left Rare).
I remember back in the day when Rare games were where it was at, when that one company could justify - by itself - the owning of an entire platform. Those days were great. The people making games at Rare were great.
They really were.