Ah, to say Square has lost its touch is a little harsh. Sure it's made some mistakes and some crap, but then again, who hasn't? And I still fail to see how FF7 is crap. I think it is the greatest in the series, next to 8 (and yes I have played all of them, with the exception of FF3 - japan).
The whole FFVII-2 deal in my mind is like all the live action crap coming out (like evangelion). I'll see it even though it might suck, but it'll be interesting how they take it.
I, for one, hope that Final Fantasies live on but the fact that they're resorting to sequals, IMO, isn't a good sign...