Long before polygons existed, sprites ruled the video game universe, pretty much. 3D was clunky and hardware intensive, and had barely started to be used by the film industry. After about 20 years, polygons started to move in. First they creeped in silently, as the computing power nearly doubled for each year to follow, we ended up in an era where polygons are everywhere. Perhaps your favorite tv channel has a logo made in 3D, or you have 3D games in your phone. Virtual reality has come to stay and that's an unarguable fact. However, those who could be promptly called the gaming hipsters have fought for the comeback (more like a conservation) of sprite games. Indie developers take pride in multiple styles of pixel art and interesting twists in 2D genres of long ago.
Not meaning to be a hipster, but there is definitely an appeal in sprites that hyper realistic polygon models do not contain. Like Hideo Kojima said: "it's good to keep parts of your characters vague so the player can fill those gaps with their own self". Not only Kojima's words make sense, but they seem to be common practice in Konami sprite based titles. The only discernible faces you get from a Castlevania hero are in dialogs or in the menu screen. Yet we can all relate to a badass Belmont and make up our own details in the small sprites.
So here we are, presented with the latest and finest tools for 3D games, and unable to make a sprite based game because there's so much horsepower that you skip right to 2nd gear, which means, we had no sprite support in UDK, not in the same way as in a 2D engine.
As appealing as a full 3D game may sound at first, it is a great undertaking for a team of 2/3 people, considering also that only one is an artist and quite n00b in 3D (yep, me )
We also had a lot of artwork in 2D and really didn't want to ditch that year and a half of work.
And last but certainly the most, we love 2D, we love 3D, we love games as a whole entity, so why not join both? We hear and read comments where people say "2D and 3D in the same game is a clash of styles" or "using a 3D engine to do 2D is a waste of power", and dare to have a different view. Look at Tomba! (known also as Tombi!) for the original Playstation, that was an excellent example of mixing both, even if it didn't age well. At the time of release it was unique, and clever too. The game wasn't about the graphics anyway, it was just quest-based platforming goodness (with some overhead sections that didn't fit too well IMO).
So yes, after the 2.5D adventures in 2D, we are definitely taking the concept into 3D. Sprite characters, Polygon backgrounds. The gameplay should be about the same, with the added perk of depth movement, opening up multiple branches within a single level. We also get to use lots of cool effects based on hardware, and ship the game into PC, Mac, iOS, Android and probably more!
What happens to the 2D version? That remains largely undecided, but it is likely that the last alpha will come to public and the version becomes discontinued.