I beg to differ. Graphically it was, but it should be given it was two years younger. Sound quality it was too but honestly very few people would have noticed on the typical set up of that era.
However the Dreamcast has 4 controller ports built into the console itself, rumble packs from day one, a portable gaming unit (ok, that was a bit of a novelty), support for using your save games on actual arcades, easy way of sharing save games, online gaming (a good 4 years before the competition too!), downloadable content (which was typically free back then).
The Dreamcast was easily the more interesting console out of the two of them. If the reputation of the two companies had been equal then the DC would likely have won out. But the PS1 was already a proven success and Sega had messed their fans about with all the failed Megadrive /Genesis addons. So a great many gamers didn’t even give the Dreamcast a chance. In a sense, their expectations became a self fulfilling prophecy.
I was gutted when the DC failed. No console before nor since has really captured my imagination quite as much as the Dreamcast did. But ultimately I wasn’t surprised either because Sony had already won even before releasing the PS2. Few people cared about Sega (or Nintendo) at that point.