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The next classic SEGA Genesis game for Xbox Live Arcade will be Sonic & Knuckles, and it's right around the corner: September 9. Fans of the original will be glad to hear its "lock-on technology" has been included so that Sonic & Knuckles will read your previous Sonic the Hedgehog save data (parts 1, 2, or 3, provided you've already downloaded them) and unlock new content in those games.
If you have the original Sonic the Hedgehog it will unlock the game "Blue Sphere," a bonus stage from Sonic 3.
If you have Sonic 2 you can play as Knuckles and reach previously inaccessible areas.
If you have Sonic 3 you can play as Knuckles and the game will be connected to Sonic & Knuckles so that you can work through the two games seamlessly.
Back in the day, the Sonic & Knuckles cartridge had a slot on top that previous Sonic games could fit into, which is how you unlocked your new content.
source
If you have the original Sonic the Hedgehog it will unlock the game "Blue Sphere," a bonus stage from Sonic 3.
If you have Sonic 2 you can play as Knuckles and reach previously inaccessible areas.
If you have Sonic 3 you can play as Knuckles and the game will be connected to Sonic & Knuckles so that you can work through the two games seamlessly.
Back in the day, the Sonic & Knuckles cartridge had a slot on top that previous Sonic games could fit into, which is how you unlocked your new content.
source