>>20619207As a artist and developer who works in the game industry, I can say that you're over-simplifying the process. It just isn't about storage space.
That being said, there's really not an excuse because it definitely IS possible. However, as
>>20620132 pointed out, what's the point of doing that?
Realistically, the best way to do it would be to add a LOD (level of detail) to the existing art assets so you don't have to re-rig or have separate rigs for every over world Pokemon. The next step would be to have the animator come up with a walk cycle for every Pokemon. All in all, it's quite a task but far from impossible and far from unfeasible. However, if they know they're going to make a shit-ton of money with less effort, they're going to do that.
Honestly, I almost feel they added walking Pokemon in HG/SS for the older fans who hadn't touched the series in years. I know many people who grew up with it, stopped around Crystal, then got back into it because of HG/SS. GF needed those games to be successful to re-invigorate the fandom outside of Japan. To be frank, they did a fantastic job with their goal. I know many adults who got back into Pokemon because of HG/SS, and because of this acceptance it's become socially acceptable to like Pokemon again despite your age (relatively speaking). This acceptance has lead to more adults being open with their interest in the franchise. Hell, the newly opened Pokemon Center website has tons of stuff a kid has no use for including many adult-only size clothing.