http://gonintendo.com/?mode=viewstory&id=165069
■working title
■takes place directly after Generations
■spiritual successor to Sonic Colors
■visual quality in line with Generations
■will take advantage of many Wii U specific capabilities
■includes the use of the Wii U controllers for up to a 4 person multiplayer
■use of touchscreen to destroy enemies and activate powers
■storyline will center around another time-space continuum shift at the hands of Eggman
■this alters Sonic’s world and Sonic himself
■Sonic will allegedly split into multiple personalities denoted by color
■each color has its own unique abilities
■blue Sonic will be the core Sonic, and will be the uniting figure with the other colors
■five other colors: Red, Orange, Purple, Green, and Yellow
■Red Sonic can cause explosions to open up new areas, but has a slow speed and a short jump
■Purple Sonic will be able to move platforms and float and will have a dark attitude
■Orange personality similar to Big the Cat
■yellow Sonic will be the fastest of them all, but takes damage easily
■only two of the personalities can be used in-stage
■all may be able to combine and act as an equivalent Super Guide
■White Sonic allegedly pops up as an option after dying in a stage a certain number of times
■using White Sonic will make the game easier, but will give you a low rank
■SEGA may be working with Nintendo developers on this game
■includes most of the Sonic Colors staff
■Nintendo helping with level design, which will take a more surreal approach
■Music Plant from Sonic Advance 2 may be revived for this project
■Rival battles: fight evil versions of friends like Amy Rose
■Eggman's personality will split, making a nice version
■classic Sonic-style 2D elements

Nintendo Did say they were being aggresive on working games for the launch of the system.

Haven't played Generations but did that game have 3D parts or was it all side scrolling.

While this does sound like a cool idea in principle, I highly doubt this rumor is true. Plus, remember the last time Sega made Sonic a launch game for a console?

I just want Sonic 4 Episode 2

Same here. It'll probably come to the WiiU's shop around launch (or depending on when Ep 2 launched, I guess), since it won't be restricted like the Wii release was. I'm still impressed the fit the original in under 40MB.