What kind of legal issues and does it have anything to do with a possible reboot I've heard about that's coming?
Oh boy ... well ...
One of the former writers is attempting to claim copyright on every character that he created on the book. Due to a technicality he actually has a land to stand on in court and things have gone South fast since then. In the end it appears as though he's obtained the rights to use his created characters in a planned Graphic Novel that is in no way endorsed by Sega, but he has to skirt around referring to certain Sega Characters officially and drastically change his character designs so they don't look like Sonic characters. He is also taking Sega and EA to court over Sonic Chronicles: The Dark Brotherhood claiming that they infringed on his copyright by creating a story and characters very similar to his own. Since the Archie case was apparently settled the Sega/EA Case is going forward.
The gray area is who owns what since Archie and Penders (the writer) are claiming different things. Right now we're assuming that the situation is a stalemate and Archie is just going to get rid of the bulk of the affected characters and keep at least two that are counterparts to their SegaSonic characters (Sonic and Scourge the Hedgehog and Eggman and Robo-Robotnik). It seems like the mass-ditching of these characters was something of a long-term plan but had to be sped along after some decisions made in court.
Characters that seem to be affected are ... (spoilered for size)
[spoil]Every relative of Knuckles' including Dimitri, Lara-Su, Lara-Le, Lien-da, and Julie-Su. Lara-Le, Julie-Su, and Lien-da were all thrown into the pit by Thrash in Endangered Species. Knuckles' daughter Lara-Su is the main character of Pender's Graphic Novel.
The vast majority of the children from Mobius: X Years Later. Sonic/Sally's kids, Vector's son, Lien-da's son, Espio's daughters, and probably Tails' children. Bunnie/Antoine's kids were created by the current writer.
Charmy's fiance/caretaker Saffron Bee who was thrown into the pocket dimension with Julie-Su. Since all of Charmy's relatives were created by Penders he is now the last Golden Hive Bee on Mobius.
Sonic's mom Bernie and dad Jules. Sir Charles Hedgehog (Uncle Chuck) is a SatAM character which means he's safe.
Sally's brother King Elias and mother Lady Alicia. Elias' wife (Megan) and step-daughter (Alexis) are safe. Sally's father King Max is a SatAM character so should be safe.
Geoffery St. John and his wife Hershey. Both are confirmed to have some part in Pender's Graphic Novel.
Amy's cousin King Rob, his wife Mari-An, and their son John. They were replaced by Bow Sparrow and Thorn the Lop in the recent Chaotix Arch.
The Secret Freedom Fighters Lyco and Leeta. The Secret Freedom Fighters were disbanded after their last mission so we just might not ever see them again.
Councilors Hamlin, Penelope, and Dylan. It's unlikely they'll still be a Council after the reboot because of this. Tails' mom Councilor Rosemary is technically safe, but unlikely to return for other reasons. Larry Lynx/Joker is also technically safe.
Robo-Robotnik/Eggman is a character confirmed safe by Archie but Penders is saying some weird things in regards to him. Technically, he did introduce the character who went on to become Eggman in the comics. Apparently he can use Robo-Robotnik in his Graphic Novel but he can't call him by that name. Same case for Scourge the Hedgehog.
There are some more minor characters in dispute but that's the bulk of the significant ones. Basically almost every non-Sega character that was introduced in the 32-Issue Knuckles series will likely not return[/spoil]
So now we're getting a soft-reboot that resulted in a massive character shuffle/revamping. Conveniently enough some of those disputed characters are going to be stuck somewhere for a while from the sound of things.
The soft-reboot was in the works for a long time before this all came to light. They started laying the groundwork for it shortly before Sonic 200. Sega wanted it because they figured a fresh coat of paint (revamps) and a lot less baggage will help bring in new readers who are accustomed to the games but liked what they saw in Sonic: Genesis/Worlds Collide.
