The reason game stories suck is because game developers think stories are easy to make and put completely unqualified people on the job. In this case the story is Sakamoto's idea and while he may be a good gameplay designer he clearly has no talent as a writer. That's where the lack of Miyamoto shows, he takes a sledgehammer to story and it's likely warranted if the writers are hacks.
I think Miyamoto takes it a little too far but overall I think he has the right idea. In a videogame I think the story really just needs to be an overall problem in need of solving. "Here is the situation, you the player must solve the problem!" That then goes with a setting and a world for the user to experience as he goes about solving the problem. Depending on the game this might include NPCs, dungeons, villages, etc. or it might just be levels and enemies. Then the player creates the story for himself within the setting and to solve the problem (that might change as the game progresses). My only beef with Miyamoto is that's lazy and re-uses the same problem and setting over and over again. Bowser kidnaps the Princess. Fuckin' played, buddy.
Stepping outside this barebones set-up is dangerous territory. Your weakness in story-telling can be exposed. You risk making characters the player doesn't like and that's the character the player is playing as. If I enjoy shooting everything that moves, a cutscene where the main character laments killing everyone would seem out of place. As would the reverse situation. A good game lets the player feel what he wishes based on the scenario. You go all story nuts and you're TELLING the player how he's supposed to feel.
Regarding Samus' design, I don't like the graphics much but Samus herself looks fine to me, she just has this shiny look everything has that I don't care for. Samus has always been a hot piece of ass. The big shock at the end of the first game is actually pretty juvenile. "Hey it turns out that badass you were playing the whole time is a girl... that you would like to ****! And she's going to strip down to reward you for doing so well!" Samus is the videogame equivalent of the bikini babe waiting for you at the finish line when you win the race.
And though I don't like Mario's voice I regret voicing my opinion on it in this thread. Let's keep it on Metroid.