According to TV Guide, this is what Lucas said about the Sean Connery character:
"It's just a completely different character, so you're not invested in him in any way. The fact that that character, after the first part of the movie, isn't needed doesn't become a problem. Whereas I think with the scene we had, where [Indy] says goodbye to his dad, everybody was, "Wait a minute! Isn't he coming back?" So in the end, I think it turned out for the best. Sean just retired and he wants to stay retired, and I understand that. [Laughs] I think he just said, "Look, I've done it, I've done it." He was very tempted, you know, and we talked for a long time. But in the end, he just said, "Eh, I'm playing golf."