So, according to Monte Cook, the original, in-they-year-2000 plan for "3.5" was that, after a few years, they'd take all the errata that had been generated, update the core rulebooks with that errata, and issue the books with all-new art. This would mirror what they did with 2nd edition (the 1989 vs. 1994 versions of the PHB and DMG) and cause a sales bump.
3.5 as delivered went much farther than that on the rules, and didn't do that on the art. To my knowledge nobody with insider knowledge has coherently explained exactly what happened.
The true "breaking" changes (not mere revisions of what powers a class got when, or spell descriptions, or the like) were the rework of the weapon-and-size rules (particularly as they faced size S PC races) and the switch from the face/reach rules (where a large creature like a horse might take up a 5-by-10 area, two 5-foot battle mat squares) to the space/reach rules (where large creatures always took up 2x2 squares). The latter, combined with an increased emphasis on giving things in terms of battle mat squares, looks like an anticipation of the coming miniatures sales push.