For 17FPS games I would actually agree. That is a very low frame rate for action based games. I find it interesting then that the examples you list as playing poorly (and I'd agree - Blood Money & Xenon 2 are rather overrated IMHO) happen to run at 17FPS and not 25FPS.
As for 25FPS, I'd say it can work - depending on the game. As a couple of examples, I personally find Lotus II and SWIV to be very playable games, even though they run at 25FPS. In general I'd say that 25FPS works much better if the scrolling speed is likewise lowered, or if the player sprite still runs @50Hz.
BTW, I could list more example games here, but I think two will do for now