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Hey I just had the thought...wat if 06 was just suppose to be a reboot of Modern Sonic, rather than the entire Sonic series in general. IE; replacing Sonic Adventure.
As disturbing as that thought is. It honestly makes a lot of sense, considering all that is involved.
It did seem that there was a new world being developed in the game and this version of the Earth could of been what they went off of, if it went over well with fans. However. Time constraints, along with whatever other fuckery, caused a release of not even complete game full of glitches and weird shit that was not explained properly.
I am still of the firm belief that the game would of probably been hated regardless of how complete it was, due to some very glaring and hard to ignore things in the game. Glitches aside.