First off, I should give you some perspective on my review. My little icon says parent reviewer, but I'm actually an educator, fresh out of student teaching. I'm also a lifelong Sonic fan; I wrote the expert mode walkthrough for the foul-mouthed Shadow the Hedgehog on Gamefaqs. I'm something of an expert on the series and its themes and this is my second-favorite installment.
The plot is simple: Eggman cracks open the world to unleash Dark Gaia, an ancient evil, and use it to build and power his world empire. He has to use Sonic to do this, which turns Sonic into a monsterous creature with a warm heart at night. He sets out to right the world, and along the way he meets amnesiac Chip and helps him find his identity. Sonic is moodier and more aggressive as the werehog, and at night he must fight evil spirits spawned from Dark Gaia and take their power into himself. Over time we see other characters possessed and even transformed by Dark Gaia's fragments, but why aren't Sonic and Chip effected (well, at least not emotionally for Sonic?)
I personally read the game as symbolic for the process of growing up and putting your life together as a teenager, lain against a backdrop of saving the world from itself. Sonic is both a normal heroic being and something new, different, and tinged with Dark Gaia, and yet he resists all temptations to do evil, just as a moral teen can resist the urge to do all those usual risk-taking things they do. Sonic's friendship with Chip, responsible fighting, and determination in the face of apparent ill health are great role modeling for kids, teens, and even adults like me.
My only concerns for younger kids are the violence, and for older ones, the consumerism. There is a lot of fighting and the final boss fight involves eye-poking. You do not want your little ones mimicking this! By 13 your kid should know how serious violence can be in the real world, though. For older kids... there are two versions of the game, the normal version (Wii/PS2) and the HD version (360/PS3). The actual level content is different, but the story is the same, and it's something of a cheap ploy to get more money. If your younger teen has one and you have any say in it, make them get all the medals and beat the final boss before they waste money on the other version or the DLC. The Wii version, at least, is a rather easy game, I barely therw myself at it and am already ranked in the top 20 of the site at which I compete in it.
Gameplay wise, it's excellent. Controls for the werehog are consistent, few glitches, fun fighting and seeing as the werehog and traditional speed as Sonic. I don't really enjoy the day levels as much as night, but that's typical of me, not other players. Fighting gets a little annoying once you reach the final continent. The music is also beautiful--see if you can spot the Green Hill reference in Adabat Night!