this is s'posed to be a more "human" movie, about the darkness of self. Sandman is one of the more "human" villains. He has a house not a lair, and it's in a crappy part of town. He screws up, he fails, he makes mistakes that aren't tied to his only character flaw. He changes his mind. He is a dynamic character, he is a truely "marvel" villain.
Why wouldn't you want to use him? Because there are cooler villains? Venom is there for the cool factor, Sandman is there because he's perfect for the story.
Doc Ock isn't the coolest spidey vilain ever either IMO, but for a movie about how "we are what we make ourselves" can you think of a better villain? Maybe the lizard, but you could go so many ways with the lizard Sam may have something else planned that suits him better.