The Atari 400 was my first PC, but that aside the ST wasn't a bad machine. Atari was getting squeezed out of the PC business, much like Amstrad pushed out Sinclair in the UK through lower prices.
The first post also asked what happened to the Atari Jaguar. The Jag was launched in 1993 as the world's first 64 bit game console, Atari put its weight behind the project and closed down all their lines in 1992 (Atari 2600,7800,XE consoles, the computer side all closed) to prepare for the Jag.
The Jag sold well initially and was half the price of 3DO, but in the rush to get the console out Atari didn't make available good development tools for writing games to third parties. Being a difficult system to program for many game writers took the easy way out and just wrote the games for the least powerful of the Jag's 5 chips, a 16 bit chip. Which was why some of the games looked like 16 bit stuff.
Inspite of the success of the 3D Alien V Predator, and the addition of a CD accessory, Jag sales weren't good and by 1994/95 it had Sony to deal with with the well supported PSX. In 1996 the final title "Fight For Life" was released for the Jag. In 1996 Atari became involved in a reverse takeover by diskdrive maker JTS, the Jag was discontinued in 1996. Hasbro bought Atari's intellectual property in 1998 and made writing games for Jag open to the public (open domain) at that time. Tempest 2000 was released in 2000 and proved that the 5 chip Jag 64 was capable of good games.