[0]https://bookshop.org/p/books/the-barbarous-years-the-peoplin...
Why they changed it, I can't say, people just liked it better that way.
They were a republic.
The article even says why the colony suffered - lack of supplies and immigrants to the colony from Sweden. That even corroborates with your point.
And yes, imo those two reasons are pretty significant enough reason to remember that New Sweden existed.