No, to both.

Fighting games can't evolve.  Games like Street Fighter and Soul Calibur already have followings.  There are people who will buy Street Fighter IV because it is the next Street Fighter game.  They know how it plays because they've played the same game more or less in several different incarnations.  This will be no different. 

In fact, if Street Fighter tried innovating too much, it would distance itself from those fans.  Same with all the other fighting games.  Just imagine what your reaction would have been to SSBB if they took away the multiple stage types, gave health bars instead of %, and took away all the items.  Would it still be SSB anymore?  Fans of Street Fighter and the rest would feel the same way if their game suddenly started completely changing.  

The problem, WoW, is that those games have seen their core audience shrink year after year since the late PS1 / early PS2 days, to the point where games like Tekken no longer sell 6-7 million, but 1-2 million, games like VF no longer sell 2-3 million but struggle to sell 800k, and games like Street Fighter, once a king in the industry, are niche products.

And in the meantime, SSB has done nothing but get bigger and bigger with each passing generation. So you're absolutely correct, Street Fighter should not change -- if it's willing to die a slow death while Smash and other games of the new ilk grow ever more popular.

I'm not saying you're necessarily wrong, by the way. Here's the central question: is it better to play it safe and milk something like Tekken, knowing it will be a dead property in 5-10 years? Or is it better to risk alienating the remaining core fans in attempt to revitalize a dying genre? There isn't a correct answer to that one until we're 10 years down the road and can look back and see. 

Bod, go look at the Mortal Kombat thread that's on the 1st page of this forum and read what people have posted in it. (Link : Website Teases Next Mortal Kombat )

Are you suggesting that MK should take the advice of internet forum folks? That's almost always trouble, WoW. That's exactly how things become niche. Don't listen to the ardent followers of a genre unless you are absolutely willing to go down the niche path.

I fully agree that Brawl has more hoopla than any other fighter. I don't agree that everything that is in Smash can be in other fighting games though. How do you place fan service in series that aren't based off of existing properties? Fan service only works in games like Smash Bros., Dragon Ball Z, Bleach, Final Fantasy Dissidia and other like it. It just doesn't apply to Street Fighter, Guilty Gear, and other series that create their own cast from scratch.

The music argument I stick with. A game like Dissidia would do wonders by having all that music in it, but who would care if a fighter like Mortal Kombat or Tekken had 200 songs? The reason it works in Brawl is because it pulls from a long lineage of familiar music, otherwise it would have been pointless too.

As far as how many modes Brawl has, I fully agree it's the most fully featured fighting game ever. It has so many damn modes it's hard to keep focus on what the game is even about, and I mean that in a good way. However, there was a time when Melee was following in the shoes of Soul Calibur and Tekken 3 as far as modes. Recently Brawl ws basically following up Melee for modes but also recent efforts like Mortal Kombat Armageddon that are also featuring mode after mode to complement the core gameplay. There will be a time when another fighting game will probably pass Brawl in modes and the new Smash will have to take back the crown. It's a cycle started by Tekken 3 and will see no end.

As far as a level creator, I can't think of too many fighters that would benefit from it. Brawl's stages are multilayered because of the platforming element that goes into them. Most fighting games take place on a single plane, and creating stages for them would frankly be boring.

There is still one place where Brawl needs to catch up with in my mind, and that's a Create-A-Character mode. Soul Calibur and Mortal Kombat are doing it and I feel with Brawl being 3D, they can handle a mode like this. Maybe in the next one.

I don't believe these other fighters feel dated becaue of Brawl any more than Sonic the Hedgehog 2 feels dated because of Mario Galaxy. That's my take on it. Oh and Brawl rules.

You milk the franchise until it's dead while simaltaniously trying to make a new IP that plays like it.

Or release "Side" versions in the new format.  Like King of Fighters. 

These series are no longer as popular as they used to be.  Their followings have dwindled over the years as they've fallen into neglect.  These companies can either make games akin to the originals or games that are different.  If the games are too different, then the companies can't even cash on what little following their franchises have.  Even worse, the people most likely to talk about the games in the media mainstream are the ones who will remember the originals and they'll be the ones most disappointed.  Disappointment will lead to bad reviews.  You'll see a lot more of "Why did they change XYZ?" and "They should have stuck with ABC."  

If these companies want to reinvent the wheel, they're better off starting with a new IP so as to avoid the negative publicity backlash.

Why are we talking about a fanservice game as a legitimate fighting game?

In terms of depth? No.
In terms of features? Maybe.
In terms of online play? No.
In terms of graphics? Definitely not.

It has tons of features, but it's not as though fighting fans want those features. I can't see Street Fighter 4 being downgraded because it doesn't have a level editor.

That's because Street Fighter only has one level.

This gets back to the edit I made to the first post you replied to. I'll quote that here, because I'm fairly sure I made the edit after you'd already begun replying to me. 

I'm not saying you're necessarily wrong, by the way. Here's the central question: is it better to play it safe and milk something like Tekken, knowing it will be a dead property in 5-10 years? Or is it better to risk alienating the remaining core fans in attempt to revitalize a dying genre? There isn't a correct answer to that one until we're 10 years down the road and can look back and see.

This central question can be applied to practically anything on Wii, by the way. Which is better, to stay with the safe shooters/fighters/RPG/action games that these companies have been churning out for decades now, with the same type of controller and gameplay style, or take a risk with something new on the Wii? Again, I'm not sure there is a right answer here. While the Wii is riskier, it's clear that the rewards are higher, as Nintendo continues to embarass the rest of the industry by making more profit than everyone combined, thrice over. But you don't necessarily achieve what Nintendo does; you can fall flat on your face instead. By contrast, the older, more traditional styles of games have seen profits shrink and shrink for years now (this isn't just true of fighting games, but especially so there), but at the same time, these smaller profits are safe. You can depend on them. Companies know how to make these games good, and they can expect to reap the rewards of it.

Take your pick.