I highly disagree with your assessment of FFXII. It received a ton of critical acclaim and I think most would agree with the reviews. I think there's a vocal minority who didn't like it.
I do think Square has lost its touch compared to the PS1 days. Back then, whatever they touched was gold and they had no problem creating a ton of projects simultaneously and releasing them in a timely manner. After FFX, something seems to have gone wrong.
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.
