The old sets were a product of time and budget restrictions, and Grant and Naylor were never very happy with the look and feel of the series.
I believe that after series 2 production moved either from London to Manchester or vice versa (the latter, I think). That was also when set designer Jem Whippey and costume designer Howard Burden came aboard, along with Mel Bibby the new production designer, and rather than re-create the original sets in the new studios they took the opportunity to redesign along with the costumes.
Although the budget didn't actually increase between 2 and 3 (according to the RD Programme Guide), more careful spending gave the impression that it had.
Kryten had proved to be a popular character and they decided to bring him back. The original actor David Ross wasn't available so Robert Llewellyn was cast instead. Kryten was found after crashing Lister's space bike into an asteroid. Lister rebuit him but was unable to recapture his former personality, allowing Llewellyn to put his own stamp on the part.
Norman Lovett moved to Edinburgh and could no longer take part owing to the commute to London, so Hattie Hayridge returned with the explanation that Holly had performed a "sex change" on himself to honour his memory of Hilly. These changes were explained in the Star Wars-esque text crawl at the beginning of Backwards, which need to be slowed down or paused to be read.
The change in sets was implied to simply be a different part of the ship, with Lister and Rimmer having relocated to the Officers' Quarters (according to the sign on the door of the set).
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