Right, i completly agree and to the end purpose it's important to have diversity.
But just like streetfighter, a small cast of 8-12 characters is not only more recognizable, but it's a lot more manageable as well, and allows to pick up the game more easily.
I had some friends over and we turned smash and all of them were pretty overwhelmed by the amount of characters, which I don't think it's surmountable in the first session of play, and only after a few times you meet you'll start warming up the gigantic roster and that I believe is a turn off for some more casual oriented people.
Also not to get into the whole smash bros isn't a real fighting game thing, but when it is played as a party game, if you feed too much information right from the get go, with characters, items, hazards or mechanics it can also be a little overwhelming, even if the spirit of the game is chaos. Street fighter is approached as a regular fighter even if people are mashing the buttons so it's easier to manage such a big cast.
Of course I personally love the giant roster and I also know the only way is up, hell I'm still pissed my girl Jill isn't there.