Why does sampling interval affect system response quite drastically?
Pole performance on discrete systems are dependent on T - the timestep.

You want the following:

$$S_i = \frac{ Z_i-1}{T} = \frac{Z_i'-1}{T'}$$

If you don't adjust accordingly, the step response will wildly change, as seen in your case, a second order system became a differentiator (with dominant zero)

If you don't adjust Z_i' for T', the equivalent pole placement is 

$$S_i'=\frac{Z_i'-1}{T'}=\frac{Z_i-1}{T'}=\frac{T}{T'}S_i$$

Since T' is made smaller, T/T' makes S_i' bigger - thus faster.

Since the zeroes are unchanged, the poles are relatively faster than the zeroes, meaning they are less dominant. That's why the system approach a differentiator.