Wayhay ! So bored at work - I have just spent around an hour scrolling through screenshots of games on MAWS and found it ! I eventually narrowed the search down to "Shooting/Walking" games as I was pretty sure thats what kind of game it was.
Its called Nitro Ball (US) or Gun Ball (Japan). The screenshot of the US version is almost exatly what I was picturing when I tried to describe it.
MAWS describes the gameplay as :
"Futuristic, fast and furious vertical action game, it's a sort of "Smash T.V." in a pinball environment."
Screenshots are available on the MAWS site (can't directly link to them off-site).
http://www.mameworld.net/mawsI seem to remember it was a pretty good/bizarre game.
Give it a go !