I've seen Sing also and I agree it's pretty forgettable, but not bad. But I mean, in my opinion so is Wrecked Ralph for example or Coco that recently released, or Rio, Madagascar and Ice Age, etc... Or even The Incredibles or even freaking Frozen to go in Disney territorry. Despicable Me was better than all of these imo. My point is the animation film is super formulaic by design and really good animation films (well the american ones) are very far and between. I can think of a couple in the last decade but not that much. Zootopia was pretty cool, Meat Balls was very fun... In general the likes of Pixar, Dreamworks and whatnot have really been losing it after the craze of their beginnings.
I don't think Illumination is that bad a choice even though I will agree that they need an artistic awakening of some sort because they are competent technically but they tend to be very formulaic (just like the rest of them US animation studios). And because of that their narration fall flat and feel like repetitions of things we've seen a thousand times before, without any artistic value added to redeem the mix. It doesn't help either that their main success is the minions which is pretty much the perfect illustration of just that : a blatant copy of the Rabbids, without the heart. But these points you're blaming Illumination for are shared by pretty much all of this industry, not just them, and even the repetitive aspect is something that can be blamed on the industry as a whole.
Still if I can trust someone to be stubborn and demanding enough so that Illumination finds its mojo, it's definitely going to be Nintendo. I wouldn't say this news is that bad, Illumination have strong points going for them. They are competent technically and on the marketing front they've proven that they know how to appeal to certain demographics so that's good. I hope the collaboration with Nintendo will really be a collaboration because they can complement each other.