Note that the PS2 version has it disable-able.
That means that it's not a fault of the hardware, but rather a feature coded into the game for amusement, nostalgia, or wusses.
Possibly a fault of the hardware on the arcade version, though I'd be rather surprised given it's a NAOMI game and the screenshots I'm seeing are a lot less crowded than Mars Matrix.
(I need to pick up a copy of Shikigami still, on a related node. Saw one cheap recently...)
In Mars Matrix's case it IS a fault of overloaded hardware.
Slowdown on a sprite-based game on a current-gen system IS notable. This isn't the NES era anymore. We aren't running on a 2MHz 6502. Or an 8MHz 68000. Or even a 33MHz R3000.
We're taliking about processors with clockspeeds in the hundreds of MHz and cache RAM to help speed things up further. Getting enough sprite action on the screen to cause slowdown is pretty impressive.
...
Getting it onscreen without making me mad at the game is even more impressive.