Searched, didn't see anything so posting it!
Most of the interview is just about game design in general, there is some SEGA stuff towards the end. I think it's a great read, it is 2 years old but in case anybody missed it you really should read the entire thing:
Did they tell you three to do it, or did they say "OK, everybody at Sega, come up with an idea"?
HY: No, it was just us three, and the mission statement was just "You guys have to make a mascot for Sega."
How many design iterations and ideas did you go through before you came up with this?
HY: Well, in the very beginning, the project staff consisted entirely of Naka and Ohshima, back before I joined them. The main thing Naka had thought up at that time was a game engine that scrolled really, really fast -- the problem after that was to figure out what kind of game we could make with that.
We didn't have any game at that time, so we had to think about that first. I thought it'd be enough to have a game where you ran really fast, but we couldn't get anything to work. Naka was really adamant about the idea that the game should be playable with one button, since Mario needed two -- jump, and run or attack.
My response to that was that if you have only one button, then all you can do is jump, so we need to find some way the player can attack at the same time. So our character needed some way to deal damage just by jumping, and from there, we came up with the idea that he should roll himself up into a ball while in the air. I think that was how we first started off.
http://http://www.gamasutra.com/view/feature/3769/game_design_psychology_the_full_.php
