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I've seen Karous get a lot of hate, but I think it's a fitting and cool game for the DC to go out on. The graphics are creative, and the game has this oddball non-mainstream concept and character design that fits in perfectly with the many other quirky titles (Seaman, JSR, etc) the DC got throughout it's lifetime - and the soundtrack kicks ass. Some people say the DC is a hardcore gamers console - I say it was the champion of quirky games with non-mainstream appeal (though it had plenty of mainstream games too of course, especially the sports ones). For every NFL or wrestling game on the DC, there were two or more Chu Chu Rockets or Crazy Taxis.

I've seen Karous get a lot of hate

Really!? I thought Radirgy got more negative critics (which i agree with, I don't like the game) but I do like Karous, a better shmup from Milestone compared to the former.

Sega stopping GDrom production did contribute to killing off the Naomi, but more games were subsequently released, and they were released on the old cartridge style boards. An example of this was an update to Karous (not sure what they added or changed). Karous was originally a naomi GDrom game, and then the revamp edition was released on cartridge for naomi as it was released after the GDrom production halt.

Technically, the killing of the GD Rom media killed the "Naomi 2" hardware! Naomi on the other hand was still thriving due to its different media (Cartridge format), many other shmups and even fighters went back to being developed for standard Naomi tech that was introduced in 98!

Nah, I don't think it harmed the Naomi 2 over the Naomi 1. The N2 never really had significant 3rd party support, all the games were being made by Sega and mostly around the 2002-2004 timeframe. N1 on the other hand, because of its huge install base and saturation in Japanese arcades, and its cheap development costs, was attractive to third parties making 2d fighters (Melty Blood) or shooters for the arcade market. Likewise the N2 was backwards compatible with the N1 anyway, and N2 could also use rom boards like the N1...

LOL! but GD rom tech was introduced with the debut of NAOMI 2 to the arcade amusement market! How could you state that it hurt the NAOMI 1 more so than NAOMI 2??? You said it yourself, NAOMI 1 thrived and continued up to 2009 or so. Sega Ceasing GD Rom also hurt the Hikaru, Triforce and Chihiro arcade tech...

How could you state that it hurt the NAOMI 1 more so than NAOMI 2???

Because unlike the Naomi 1, the Naomi 2 was dead with no one developing software for it well before Sega ever stopped production of GDroms. The last game that came out was released in 2005, and I've never heard of any in production games since then, nevermind any that were frustrated in 2007 due to Sega stopping production of GDroms. This is in contrast to the Naomi 1, where 3rd party developers were still releasing software for it in 2007, 2008 and 2009.

Ceasing GDrom production theoretically harmed every system that could use GDroms, but some of the systems had no games come out for several years before sega stopped production of GDroms. In contrast, I think the Naomi 1 had releases every year until 2009. The aspect which made it financially attractive for people to continue to develop for the Naomi 1 10 years after it came out, and to not develop for Hikaru, Triforce, etc, was that the development environment was cheap and probably every arcade in Japan had several Naomi 1 systems to play the software.