I think the real issue is not whether the 32X is a good system or not, (it was killed off too early to know what developers might have done) but lack of communication and cooperation between SOJ and SOA. With the huge success of the Genesis here in the states, one can't help but wonder why on earth SOJ wouldn't want to work WITH SOA to keep that huge market. I truly believe that the success of the PSX wasn't entirely due to it's somewhat better graphics capabilities, but more because of gamers frustrations with Sega.
It was clearly Sega's game to lose and they certainly dropped the ball. They made a valiant effort with Dreamcast, but it was too little too late.
Who knows though. Maybe someday we'll read in the gaming mags or on the web that Sega is planning a new console release. Sony can't stay on top forever right? Or is it Microsoft who is on top? I haven't been keeping track.