I can't say I know much about Team Andromeda that created the Panzer Dragoon series. I believe Saga was just an experiment to expand on the universe a little more than just making it a shooter-on-rails game. The team was likely dissolved shortly after Saga was released to move some of their key developers to work on some big titles for Dreamcast and were moved to Smilebit, where they went on to make Jet Set Radio. When the Dreamcast was let go, the team was likely in the process of finishing Panzer Dragoon Orta and Gunvalkyrie, which later appeared on the original XBOX. Smilebit was then restructured in 2004 before the Sega/Sammy merger, just as several other studios were, and I think those members joined another group...I think they're the team working on the Mario & Sonic Olympic Games series? I really don't think we've seen the last of Panzer Dragoon, as there was a track in Transformed inspired by Panzer Dragoon. But if you look at any of Sega's studios, none are the original teams in anything.
I don't recall much being said about why the original Team Andromeda was dissolved though.. Companies go through restructuring all the time, be it to divide up and coming developers to help them expand on their skills, or for financial reasons.. Not wanting to promote Panzer Dragoon Saga was likely because it was released in 1998, right near the end of the Saturn's life. SEGA's made a lot of risky moves with games throughout alot of their history. I can't see them shaming a team for trying something different..