it actually does, the thing is, you have to use a thunderstone to make it evovle.

been long time since i played yellow, so not sure if the pikachu given in yellow refuses to use the thunderstone???

It refuses the first time.
Then you have to retry and it evolves.
But actually it is not your partner as a field Pokémon anymore.

in old yellow it wouldnt evolve no matter how many times you try to use it, is this seriously the only thing they changed? weird

I used to talk about the old one. Just bought the blue one some days ago. It says they didn't change anything compared to the old ones.
But I have in mind that you can evolve it there. I could swear it.

Anyone play these? Is there any online trading or battles?

As far as i know, no online whatsoever unless you want to move pokemon to the pokebank