There's nothing wrong with having limitations, but when you're advised to avoid allocating dynamic memory, you know you've got serious constraints.
Technical constraints might not make games less fun, but they make games less fun to program if you add too many.
Practically all of the modern programming techniques run on the assumption that the computer has at least 1GB of RAM and memory can be allocated as required.
I can live with having 8 bit registers, but having a 2-colour screen is one of the two most limiting factors of the Arduboy. As far as I'm concerned having 4 colours would be a fair compromise since it's just one more bit per colour but would provide enough extra colour depth (i.e. 2 shades of grey) to make sprites much more satisfactory. If I were suggesting 16 colours or something I could understand people arguing that's too many, but just 4 seems like a reasonable middle ground.
What I mean by giving the wrong impression though is that people with no experience might buy it as a first step into programming expecting it to achieve Gameboy-level games (since the 'boy' part suggests a parallel) and then being disappointed when they realise the specs are closer to the Pokemon Mini. I'm not saying the Arduboy isn't capable of running good games, I'm just saying whatever clones people make for it will always be lacking features because its specs (in terms of memory, screen depth and screen size) are lower than many of the earliest 8 bit consoles, which people will undoubtedly try to compare it to.
I've said it before - you can't expect a fully featured Pokemon game for the Arduboy, it's important people are aware of this.