My experience of SC2 comes from the open source remake, The Ur-Quan Masters. I keep hearing about how SC3 isn't as good as SC2, but only vague hints about why it isn't as good beyond the puppets.

- The series was taken over by different writers when Activision purchased the rights.
- They did not follow-up on the story hinted at, at the end of SC2
- They voice acting on SC3 was terrible compared to SC2.
- They used mechanical and hand operated puppets for the alien races which looked bad
on screen.

All in all epic fail on a compelling follow-up. They took a great game series and trashed it in one fell swoop.

The fact that different writers were involved, lack of follow-up from SC2's ending, voice acting (which IMO wasn't that great in SC2 either), and puppets seem to be a matter of taste.

Where did the new writers fail, besides not following up SC2's ending? More importantly for me, what gameplay aspects degraded?

I'll refer you to this thread: http://www.gog.com/en/forum/star_control/is_starcon3_worthy.

There's some great posts there in regards to Starcon3. Pros, cons, what Legend did right and what they did wrong.