How does it hurt Game & Watch? Flat Zone maybe, but I don't think it makes much of a difference for the character himself. :P
I do like what they're doing with the N64 stages tho, keeping the whole blocky/pixely visual style but making it also look more contemporary.
I mean, the first levels also are usually the most recognizable, so it kind of makes sense, but on the other hand, it also skips out on a lot of cool stuff. It's especially jarring with Mario, since most of what we've been getting is Mushroom Kingdom variations, with a few traveling stages here or there. I actually really liked that they went with Rainbow Road as a stage in Smash 3DS, because it's significantly more iconic than any Mario Circuit has ever been. Alas, I don't think we'll ever get stuff like Bowser's Castle, a haunted mansion, or any of the other non-grassland environments that are just as iconic and prevalent in the Mario franchise as the grassland stages are. And that's just Mario.
That said, there have been stages that utilized later areas, such as Norfair for Metroid, which tends to be the penultimate area before Tourian, Magicant for Mother, Port Town for F-Zero, etc.