Granted it's been years since I saw it -- and I saw it during previews since official opening was delayed due to the writers' strike that year, so it's possible they changed some things after I saw it -- but I remember loving parts and being so disappointed at other parts. Little Mermaid was my absolute favorite movie growing up so being a Broadway lover I was determined to see it right away. My opinions line up with most others here but I think overall the reason is that it just didn't have the innovation or wow-factor some of the other Disney Broadway shows have had.
I was skeptical of how they would do the underwater scenes but after Lion King I had such high hopes they'd come up with something innovative...my response was meh. I didn't mind the heelies as much as I thought I would but I agree that some actors pulled them off better than others. I thought the underwater sets were so bad, almost something out of the live 30 min show they do at Disney World, not Broadway-caliber at all. It just looked like a chunk of plastic with things stuck to it (plastic pipe, plastic fork, plastic starfish -- just bad). That being said, the lighting was beautiful, and I loved the way they pulled off the scene when she swims to the surface when she gets her legs (on a wire swimming to the top of the set and then popping up on the stage on the shore), I thought that was cool. The costumes were pretty bad, particularly for the animal sidekick roles.
I remember thinking Ursula was just not menacing nor was her voice soulful enough, and I agree with other posters that a man playing her part might have worked better. I, too, was disappointed with the elimination of Vanessa's role (I always loved that part of the movie) and the addition of the singing contest scene was dumb, but that being said I did like how it ended up that Eric fell for Ariel despite thinking she wasn't "the voice" -- as in, he actually fell in love with her as a person vs. some mysterious voice on the beach. Sierra Boggess's voice was just beautiful, like Ariel come to life. I thought she was great.
As for the new songs, I loved "She's in Love," "The World Above," and "If Only" (the quartet is very beautiful) but, as others have said, Scuttle's songs were really weak.