1- The base PS1 controller had no analog sticks. That didn't stop Sony from later adding two analog sticks with the DualShock
2 - There was no problem with the GD-Roms ( besides being easy to Pirate ) . Having multiple discs for a single game was not an issue for many PS1, PS2 and 360 games so I don't see why it would be an issue for the Dreamcast
3 - They could have easily made a DVD add-on ( like the OG Xbox ) if they had the funds to do it .
There was nothing wrong with the Dreamcast model that we got . The problem is that Sega ran out of money to manufacture more consoles, it's that simple.