During the early stages of Spyro's Adventure, an in-game model of Sun Dragon was already made, and his gameplay was quite similar to Camo's. Like Camo, Sun Dragon could fire sun energy spheres as his primary attack and release a string of plant firecrackers as his secondary moveset. Sun Dragon was first sighted in the cinematic of the Spyro's Adventure Beginning Trailer, notably seen fighting with Slam Bam and Gill Grunt on the right side. And he was seen again on the left side of the screen when the Skylanders were being blasted out of Skylands.
Toys for Bob eventually decided to scrap Sun Dragon altogether very late in the Spyro's Adventure development and instead created our lovable Camo, who became Sun Dragon's successor. Some of Camo's attacks are very much like Sun Dragon's and both even have the same element. But their designs are very different from one another.
Because of the character changes made late in development, Sun Dragon was left in the Beginning Trailer as a sort of easter egg while Camo himself was added in as a last minute cameo.
There have been few Skylanders, and perhaps many more, that were made during the development of Skylander games over the years. Some would become scrapped when the developers created an updated version of the heroes or felt that they were too out of place or were difficult to develop. Some scrapped Skylanders, like Krypt King and Chopper, were brought back after the developers discovered that they may fit in with the game's current gimmick or simply because they wanted to bring them back.
Will Sun Dragon be brought back as an upcoming Skylander in a future Skylanders game? With a new name, new design, element, or completely different moveset? Only time will tell, and it is up to the developers of Skylanders to decide.
As a bonus, here is a special prototype gameplay footage of the mysterious Sun Dragon Skylander before he became his successor, Camo.