This is a disposable camera for regular film. It's a Fujifilm QuickSnap, with Sonic & Knuckles theme. The front has Sonic & (a seldom seen) Knuckles stock art, & the side has the S&K logo.

Clearly, it was released around the same time as the game. Cameras like these can't really have the film developed, because if you do, you lose the camera itself to the developer. It is a single-use item, which probably aids in its rarity. (meant to throw it out) These low budget items aren't really even electronic, they're more a mechanical thing that exposed film when you pushed the button. The film cartridge would be removed by the developer at the end. The right photo shows the shelf-peg hanging cardboard top still intact (as you would see it in-store) The UK MAY have had this camera as well. Still, it's interesting that Fuji decided to sell a Sonic & Knuckles themed camrea!