Guns N' Roses isn't one I thought of. But you're all right, huge loss of potential there.
Here are some I thought of:
Frost* - Great first album, but I was incredibly disappointed with the second, going for more of a mainstream pop sound (I know the first hinted at this, but the second took it much farther and IMO too far). Then the main driving force of the band just calls it quits making things worse, because the band is pretty much dead forever. Definitely blew it.
Thunderstone - Started off as a decent power metal band (a power metal band I could actually enjoy listening to, very rare and there's not many of them). Then they moved onto more of a standard metal sound over time, which I thought they still did well even though it took me longer to appreciate. But I had high hopes for Dirt Metal after the progression of the albums leading up to it (Evolution 4.0 = great), and it was a huge disappointment that has still not grown on me and probably never will. Now, the band members seem more focused on their dinosaur kids metal band than Thunderstone so there's nothing on the horizon. There probably will be something eventually, but for the moment, not a thing.
The Corrs - Probably a band no one here gives a crap about, but I like them. Or at least their older stuff before they started to blow. It. The first album was almost a masterpiece, my only gripe being that there was too many traditional songs (although I still liked them) and not enough originals. Their fusion of celtic folk and pop was masterfully done. The second album, Talk On Corners, took them further into pop and rock territory, but it still felt like the same band. But even though In Blue had one or two decent songs, starting with this album they began a huge nosedive that only continued to worsen as each subsequent album was released. What started off as a fusion of celtic folk, rock, and pop became nothing but tacky pop, and it was not only a complete waste of their talent but also the loss of something that was unique and interesting after its complete bastardisation.
Some people might not agree about Frost* but oh well. I can't think of any others offhand except these three, so far, besides what was already mentioned.