For me the problem is that most everyone involved in the creation of Squaresoft's most beloved games is gone now. They lost large chunks of employees and several creative powerhouses to Monolith Soft, Brownie Brown, Sacnoth / Nautilus, and a whole bunch of other splinter companies. Sakaguchi left to found Mistwalker, and Matsuno departed after Final Fantasy XII. Others like Uematsu, Mitsuda and Kato went freelance, and though they didn't completely sever their ties to the company, they certainly started to play a less prominent role.
Of course old people going out and new ones coming in is part of the life cycle of any company, but I'm not convinced SquEnix have gone out of their way to find adequate replacements for some of the fantastic talents they used to have. I don't think it's a coincidence that when they do do something right it's usually because of the involvement of some of the staff from their golden years, nor that Dragon Quest, which as Aeolus noted still has most of its original key staff, remains just about their most consistent series. Part of me wants to see them give another shake to older franchises, but part of me believes there's hardly anyone at the company capable of making something good out of them.