Considering that FFX and XII are two of the best looking games on the PS2, yeah I think they did push the PS2 for all it was worth. Also, when Square chose to shift production of FFVII from the N64 to the PS1, the PS1 wasn't exactly lighting up the charts. In fact the N64 pulled within a million units of the PS1 in 1997 despite the 1 year disadvantage. Square just felt so strongly that the PS1 hardware was better suited to their vision of the game. The CD storage space was important then, and the Blu-Ray space + HD + Cell could be crucial now.
Edit: the lack of 360 sales in Japan could also hurt the chances of a 360 port.
My Top 5:
Shadow of the Colossus, Metal Gear Solid 3, Shenmue, Skies of Arcadia, Chrono Trigger
My 2 nex-gen systems: PS3 
and Wii 
Prediction Aug '08: We see the PSP2 released fall '09. Graphically, it's basically the same as the current system. UMD drive ditched and replaced by 4-8gb on board flash memory. Other upgrades: 2nd analog nub, touchscreen, blutooth, motion sensor. Design: Flip-style or slider. Size: Think Iphone. Cost: $199. Will be profitable on day 1.
