"Solid State" is a continuation of the Stand Alone Complex series and storyline. The creators of Stand Alone Complex(SAC) series have stated that SAC takes place in a "alternate universe" to the original movie and sequel(Innocence), where the puppetmaster case never existed, and the Major's body was never destroyed. In other words, the original movie and Innocence are part of the same storyline, but are completely seperate from the SAC series.
edit: Another poster to this board said it better than I did: "The two first movies should not be viewed as a direct continuation(of the series), as they simply are not. :) Rather think of them as separate masterpieces with the same characters and similar themes..."