gawgeous. why is 3D such a standard? is there some legitimate reason for it, or is it really just that some time in the early 2000s someone somewhere decided nerds needed and extra D, regardless of whether it contributed anything to the game or not? I get why Quake is 3D. I get why Portal is 3D. who determined that nowadays only Mario rehashes are allowed to be 2D?
A large reason is that from a game play point of view, 3D is much easier to plan around.
You can do things like time of day, more 'organic' randomly generated locations, subtle things like animated trees and water, interactive particle effects (fires can cast light, etc). You can also have level designers not have to be super skilled artists (with having artists focusing on Asset Development, and designers focusing on Design) so you can create larger games in shorter periods of time, taking advantage of peoples specialized skill sets.
2D graphics, of this high end nature, can take MUCH longer to produce then 3D ones, and are extremely difficult to change once they are done.
When it comes to characters, having proper bone blending of animations is incredible. My brother showed me a tech demo he is putting together in UNITY, which is amazing to see how it blends the animations together from running to walking to fighting, all in a fluid motion. That's something which, in 2D, is seriously difficult to achieve in a way that you aren't using thousands of frames of animation, and constantly having to juggle resources.
The best of both worlds is 2D, projected over 3D geometry, and using normal maps to get depth in those images. You of course have limitations, but honestly, the 2D just looks so much better.
For characters, I would have to say that there is no better substitute than 3D.