The Dreamcast failed because of many reasons, but mostly because of Sega, a real lack of developer support and consumer backlash.
The Genesis was plagued with hardware add-on's that simply weren't worth the price, the Sega CD was a beast with grainy video and laughable titles except for possibly Snatcher which was a chore to even get your hands on, the 32X was too little too late and both add-on's were very expensive...this was the start of consumer angst with Sega.
The Dreamcast came out shortly after the Saturn, the Saturn was an expensive system that couldn't compete...the games were lackluster at best and only a megar handful of titles were even worth the system, the Saturn was a system that Sega shouldn't have even bothered with and those dedicated Sega consumers got the shaft yet again.
The Dreamcast itself, while fairly inexpensive, had a loud fan..an expesive memory card that had a screen so you could play games on it....but the amount of games you could play were few and the battery died out way too quick...Sony tried this as well with the Pocketstation and they both failed.
The Dreamcast has some good titles here and there, but the actual library of games released are forgettable.
In closing i think the consumer base was just plain fed up with Sega's tactics and their inability to get more developer support.