The real reason I believe that there is a sentiment that 'Japanese Games Suck' is because Japanese Developers aren't driving the direction of the industry anymore. I think the real problem is that while Video games have stayed popular with the generations that grew up on NES and SNES in America, in Japan adults do not spend as much time gaming as they have longer work days/weeks. Because of this, the average age of gamers has risen world wide, but not in Japan, so the Japanese market is out of sync with the rest of the world in some areas. Also, Japanese culture in general is more risk-adverse than American or European and with rising costs of development, many Japanese Companies have resorted to sticking to their classic franchises, some of which have become stale.
I personally own way more Japanese games than American/European/whatever else, but if you take Nintendo out of the picture than it is probably even. The fall of the JRPG has definitely helped this, as the JRPGs I would have bought just arent around anymore (though at least I have some upcoming purchases to make for Wii, yay!). I don't think the Japanese market is dead, just in need of a refresh of sorts, I am sure that as the older generation of developers gives rise to the new, we will see a resurgence from the Land of the Rising Sun.
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