Is it better than the console versions? No.
Is it shorter? Yes. (By 2 zones)
Do these questions matter? Nope.

You know why we were all hyped for this game? Because it is a flashback of nearly the blue blur's whole history, with familiar environments that cast all new levels! To top it all off, you finally get to play as Sonic's original design again, as well as compete with other players via Nintendo Wi-Fi Connection.

This version stands out from the Xbox/PS3 game due to its different worlds (With the exception of Green Hill Zone) and said online play. Players get to romp through the greatness that is Green Hill (Sonic 1), Casino Night (Sonic 2), Mushroom Hill (Sonic and Knuckles), Emerald Coast (Sonic Adventure), Radical Highway (Adventure 2), Water Palace (Sonic Rush), and Tropical Resort (Sonic Colors).

Classic Sonic plays nearly exactly like in the original Sega Genesis games! While the Genesis-era levels for him are duplicates of the originals (Without the miniboss for Mushroom Hill, though), the rest of the levels (Dreamcast-era and so on) are all-new, yet they fit with the classic platform-orientated gameplay amazingly! Eventually, Classic Sonic gets the Homing Attack, which locks onto enemies for Sonic to hit. People may not like this addition, since people recognized it from the Adventure games, which were way after the Genesis games (Although it was first in Sonic 3D Blast as you could use it when receiving the Golden Shield). The console versions of Sonic Generations also had this attack (As an optional feature), but players could enable or disable it. Personally, I think it adds to the gameplay nicely, but in case if you just don't want to use it, I suggest you just try not to press B twice in a row.

Modern Sonic, on the other hand, is more focused on speed. Like in the Sonic Rush series and Sonic Colors for DS, Modern Sonic is equipped with a Boost bar to go extremely fast, as well as the Homing Attack. While it's still somewhat platform-orientated, Modern Sonic is best defined by his much faster pace, as well as certain in-your-face surprises (Whoa! A giant totem pole is falling towards Sonic!).

Also exclusive to the 3DS version is the Special Stage. Special Stages are for rewarding a Chaos Emerald after completing obstacles where you must collect orbs to be able to Boost to dash to collect the emerald. The gameplay here is like that of Sonic 2's or Sonic 3D Blast's Special Stages.

Remember when Sonic had to race Metal Sonic? Or when he was chased by that killer whale? How about when he was venturing through the neon Casino Night Zone? You can relive those moments in this game, and they fit perfectly with the new level layouts!

The graphics are hugely lush and very colorful and detailed. Heck, since you don't need a 3D TV to see it in 3D (obviously), you can just go and gaze at the visuals at their finest with ease and awe. The music is from the respective Sonic games that the worlds represent, but the soundtrack is still pretty robust and catchy.

Online play is a very nice addition. You can race another player worldwide through any level that you have beaten in the main game. Like racing games such as Mario Kart Wii, there are points rewarded to you as the other player loses those amount of points. The result is well done and adds to the replay value greatly.

Speaking of replay value, like the console versions, this game has a whopping 100 missions. However, you'd need to unlock said missions, but once you do, be thankful that there's even more to the game than it shows to begin with. The game is actually very short. You can beat the game within perhaps a couple hours. But even if you did beat the game with its minimal requirements, there is absolutely no doubting that you had enjoyed the thrillride throughout, from beginning to end. While it wasn't better than the console versions, it certainly was close. Besides, whether you have the console version or not, this game is still a must-buy.
Happy Birthday, Sonic...

(Note: You should buy the game from a store. Copies online are overpriced as of this writing, and are as expensive as Wii games)

UPDATE: 10/7/2013
Okay, I think I've given the game a bit too many positive aspects. It's definitely not an AWESOME game by any means, or maybe even great to some, but it's still well worthy of 4 stars in my opinion.

There are some pointers that may be a turnoff for some players. First off, Modern Sonic's levels are not exactly as well-polished as they were in the DS titles. The Rival battles are also somewhat monotonous and couldn't pale anymore in comparison to the console version's (They still beat out Sonic Rivals's races by a long shot, though).

Saying that Classic Sonic fits perfectly with new level layouts was also a klutzy claim I made. The level design is still not bad, but at times, some segments don't feel too pleasant. Whether it's a chain of dash pads or bursts of wind trying to carry Sonic, this certainly isn't the best level design out there.

Overall, though, I still recommend Sonic Generations to those just wanting another portable Sonic to play, or for those who simply want more of Sonic Generations. If the choice is there for you, though, I recommend at least one of the DS Sonics over this......Unless you're in for the online play.