Theses genres are so niche that there is absolutely room for both. It is saying something that 2D beat'em ups never really surpassed Guardian Heroes though. Not sure if they've been resting on their laurels and familiarity, or if Guardian Heroes is truly one of the best games of all time.
Guardian Heroes is nice and all but:
1) I'll take the more free-roaming movement of TMNT, Final Fight and SoR over the 3-plane system any day. Even Advance Guardian Heroes felt better to play in spite of much else being more simplified because I could simply walk up and down.
"But then I couldn't duck!" you say, as if that ever actually helped you do anything in Guardian Heroes, a game where the vast majority of the projectiles are either homing or consume the entire screen.
2) Golden SIlver is the only mechanically interesting boss, and that's because of the gimmick he took with him from Gunstar Heroes. Every other boss basically amounts to "find your best combo and wail on them with it before they launch their attack". They all basically amount to characters who hit harder, move faster and shoot more fireballs and bigger laser beams, but with no heavy deviation in strengths/weaknesses, AI/tactics, or gameplay divergence. We don't even get the usually-expected types like the "non-stop mook spawning" boss, the "punishes blind aggression and encourages you to wait for an opening" boss, or even notable Treasure-staple boss types like the "boss with 7 phases back-to-back", or the "boss that disables attacks so your only hope is to master dodging and defense".
I will give the caveat that this is probably so that the multiplayer mode can even be a viable thing, but man, it's pretty disappointing. Even Mad Stalker, the game Guardian Heroes is inspired by, has more variation in it's boss design, in spite of how each boss also counts as a fighting game character for 2P mode.
3) The RPG mechanics are too baked into the game's core; there's no real way to do a low-level run, and the main "difficulty" of the game comes from buffing stats to such absurd degrees that grinding and raising your own stats is necessary.
4) The branching story paths are great, but it's annoying having that mid-game intersect that doesn't change no matter what. The replay value takes a hit having to watch the same cutscene 8 or so times, ESPECIALLY when it's the longest cutscene in the entire game.
5) WHERE ARE MY GRAPPLES, SUPLEXES AND THROWS? It's not even like they'd be all that out of place, there's several characters that are built like they could do them!