The SD series are a rebranded cosmetically altered Sigma. In essence the 3rd generation of Sigmas.
Actually the 3rd Gen Sigmas had been on the market for several years when the SD went into development. However, you're essentially correct on the SD being the next evolution of the Sigma.
What I've been told by a very reliable source formerly within S&W follows.
The pistol we now know as the SD (Self Defense) was actually developed to be the 4th Gen Sigma. The primary goals in development were to address the shortcomings of the trigger (without internally cannibalizing sales of the M&P), and add a standard rail. It was going to be called the Sigma Delta (or SD), rather than 4th Gen Sigma, to emphasize the significant changes.
Somewhere down the line it was decided that keeping the very good selling Sigma, and adding the SD as a separate pistol was a better sales strategy. The SD abbreviation was kept, but now standing for Self Defence. Steel sights, tritium front insert, and Melonite top end were added to the aforementioned standard rail & improved trigger to fill the $400 price point & feature set void between the Sigma and the M&P.
So, yes the SD can be thought of as a souped up or next gen Sigma - heck they use the same mags, and I'm pretty sure you can swap top ends on them (but don't hold me to that). On the other hand, when you look at the SD's quality & features it's a strong value at the price point.