I think that they should have updated some other classics. Classic IP is classic IP. Every iteration of a Nintendo console gets a new Mario, Zelda, Metroid, Mario Kart, etc. Variations on a theme. Tempest 2000. Defender 2000, MC3D and Breakout 2000 are four of the better Jaguar titles. Atari definitely had other IP to mine and update.
Personally, I always wanted them to work with Atari Games to update some of the later arcade titles that were brought to the Lynx. Roadblasters, XYBOTS, Stun Runner come to mind. Also, updates of Asteroids, Centipede and Yars Revenge could have been cool. The challenge with updates to very old games is adding depth to a game while staying true to the original spirit. Tempest 2000 and MC3D did a fantastic job of this.