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Unsure if this is a known issue or not, but I felt it was important enough to point out. I was just playing again, seeing how far the demo went, and I hit pause during the transition between levels. When I arrived on the new screen, the character was in a sleeping position on the ground and I couldn't move. I hit pause again and he was upright, but things were dark. I unpaused and...honestly it looked somewhat nightmarish for a Sega game. Everything was blacked out or really dark, the path you walk on was barely visible, and his eyes were missing.

Basically, I broke the game by pausing it between stages.

That sounds like a palette error (I've fixed a few of those since that release). As for the sleeping, he does that when left alone for a while, but the left/right buttons should wake him up again. I've added it to the QA list and I'll see if I can reproduce.