Yeah! There was a mini-game called "Chao Adventure" that would let your chao go for a walk with little events that would happen along the way. It was also the only way to see your chao's stats and name them.
The Dreamcast really was ahead of its time. VMU-linking was honestly a really excellent use of the tech available at the time, and opened the doors for a lot of really interesting ways to play games. Some games even had single-player minigames you could access from the VMU, so you could play while you were away from your console.
If Sega had marketed the Dreamcast better, it could've really dominated the gaming scene at the time. It had a lot of features that were way more advanced than its competition. Hell, Sega could've possibly still been in the hardware market today if their consoles sold better. Sometimes I wonder what the gaming space would be like today if Sega was still making consoles.
I truly believe there were only 2 factors that mattered in its death. First and foremost was the massive amount of debt the failure of the Saturn had left Sega already trying to recover from. If they hadn't had that to worry about it would have been financially successful as it stood.
The second factor was more insidious. Sony did such a good job hyping up the PS2 that people really believed it would be way more powerful than the DC. Yet the DC could produce better graphics than the PS2 at launch. But that's not what the public perception was. I worked at Electronic's Boutique during the PS2's launch, and no matter how much I tried it was impossible to diffuse the hype around it when I would try to convince people there was no need to wait and they should get a Dreamcast today rather than waiting for the PS2. But it was a lost cause most of the time. And ultimately those people are better off with how things eventually played out