Sonic is the most obvious one for me but everyone already can guess why. So I won't go into details. 
 
I feel Cervantes was one of the best final (sub-final) bosses in fighting game history. His moves just oozed with confidence and Namco nailed the idea of a possessed pirate (given that its a 1996 fighting game). I'm not going to claim that he was revolutionary or anything- he was just a cool character. When looking back at him just rememer that this is from the mid 90s- so take his presence with a grain of salt.
  
  

Never been one of my favourite Soul Calibur characters. I like his style, but he's not someone I ever really played all that much - much more of a Mitsurugi-Taki-Seong Mina guy.
 
To reiterate, Soul Calibur IV is my favourite current-gen fighting game, and it's incredibly easy to forget that the Star Wars characters even exist.

" To reiterate, Soul Calibur IV is my favourite current-gen fighting game, and it's incredibly easy to forget that the Star Wars characters even exist. "

inb4 sonic.

Having a hard time thinking of one (besides the obvious Sonic). Samus might be a candidate, but I shouldn't say that since I haven't even played the game yet. 
 
Hm, maybe the character design in Castlevania Judgement is another possibility, though in that case it was more me not liking their redesigns rather than their characterisations. Characterisations that, for the most part, were either non-existant or poor executed in the first place. 
 
But hey, thinking about it, the characters from my favorite Castlevania game (Dracula's Curse) is my answer. Sypha and Grant, apart from their awful redesigns, went from basically non-characters that were fun to play, to characters I disliked.

Sonic.
 
EDIT: Fuck!

Cervantes was a fuckin' legend in the original Soul Blade. He really stood out amongst the roster - more than the fact that he had two weapons which my Uncle claimed was unfair. I never played the original SC but by SC2 he was just another fancy dressed fighter who had little bearing on the steadily decreasing plot. I really liked Soul Blade and the storylines and the alternate endings and the interactive cutscenes. They were really good for its time and unique for a fighting game. Then the SC series just turned into another button masher with 4 second endings. 
 
As for my own characters going through a downfall: Leon S Kennedy... predictable ole me ;P 
 
But really, he was a likeable guy in Resident Evil 2. Rookie cop who inexperienced with fire fights let alone against the shambling undead. He was naive, too trusting, gullible...but then he went and joined the Government who went on and gave him a whole new personality to go with his new skill set. I don't mind him being more confident, but there was no need to turn him into a bleedin' Marvel Hero complete with stupid one liners. Also I prefer Paul Haddad greatly over Paul Mercer with Leon's VO's . 
 
Oh yeah and then there's Degeneration where he yet again was pulled under a steam roller to iron out his personality even more so. Now he's just a terribly bland and boring character who now only has his fighting skills to show his character.

" inb4 sonic. "

" @Atlas said:

" To reiterate, Soul Calibur IV is my favourite current-gen fighting game, and it's incredibly easy to forget that the Star Wars characters even exist. "

Its not just the Star Wars characters. Its that the gameplay is extremely tired now, stat boosts with customisable gear is bloody absurd and the modes were badly put together. They also simplified many of the move lists for no reason and mangled the story.  Oh and only introducing one new character in a major fighting game installment is insulting. Hell, even the mediocre SCIII shone in comparison.  Shame a once excellent series has to turn crappy. "

I dunno. Seeing Mario ice-skate like Brian Boitano doesn't help his case.

A lot of older characters from my youngin' days.  
 
The biggest one that jumps out at me would be Tails, even more than Sonic. I always played as Tails when me and my brother played the old Sonics on 2player so I always loved the character. In the new games he's horrible, though. 
 
Also, I like SC II, III, and IV. It's hard for to decide which is my favorite, as there are things I think each game did best.