Have you not been listening?  Both WRPGs and JRPGs have games that follow stock formulas for their genres and people point to as being 'stale'.  I've already pointed out some multiple times for both sides in this thread.  But I've also stated that trying to simply summarize an entire genre into generalizations or stereotypes is a path to failure, as there's always exceptions.  And yes, that includes JRPGs, as I've already pointed out JRPGs in this thread which are an exception to all of the phrases and generalizations people have tried to create for JRPGs in this thread.

Planscape Torment easily has the best story in gaming, period. However, what you call dumbing down, I call evolution and refinement. Part of the reason why WRPGs have become so popular isn't just the technology improving and allowing for more interactive story-telling, but also the fact that these games are now more accessible for people beyond the niche hardcore RPG players. The story-based decisions I'm making these days are far more involving than most old school RPGs (except Planescape).

So, you call going from niche to mainstream evolution, I call it dumbing down.

Now, the decisions seem more involving because, because of the technology, you can have "bigger things", but all in all, the plots, the characters, the costumization, everything is just so watered-down these days.

Pepole call Oblicion a good WRPG, but there's really nothing good about it except the graphics for it's time, the quests are less creative, the leveling system, everything just seems to be dumbed down so they can sell to the masses.

Consider it this way, five years from now, will pepole talk with more passion about PS:T or about ME? Will pepole even talk about ME five years from now? Pepole have pretty much stopped talking about Oblivion by this point.

I agree, but the fact that so many people seem to do it suggests there sin't as much variety in the genre as there should be. I'm of the opinion that many of the JRPGs that do show variety just haven't been publicised enough for people to play them. However, Looking at this and the last gen of JRPGs I don't see much having changed and I still think WRPGs have more variety in them in general. Quickly off the top of my head:

Perspective: FP/TP/Over the top

Main character: Pre-determined main characters/ completely user-created character

Type of world: Open-world/select areas/world map

Battle system: Dice roll battles, real-time, semi real-time

I'm hoping White Knight Chronicles, Demon Souls and possibly FFXIII will help change my mind.

Firstly, after playing Morrowind and Oblivion, I still preferred Oblivion. The Dark Brotherhood quests were great, and much praised at the time of release. The levelling system I did feel was dumbed down but not a huge amount. A seperate skill group for axes instead of just "Blunt" would have been nice, but at the end of the day was it really needed? The battle system not relying on an invisible dice roll as well I thought was an improvement as it plays in First-Person, so when you see an arrow hit, I expect it to do damage. If you really want an example of "dumbing-down" you should look at the Deus Ex series.

Secondly, people still are talking passionately about Oblivion, a quick look on TES nexus will show you that. People are still bringing out incredible mods for it. I'm still playing it from time to time because of those mods and I talk about it as passionately as Planescape Torment. Further, I think people will still talk about Mass Effect as it's the first part of 3 for one thing, and it's done a much better job of creating a universe than Halo, yet people will still talk passionately about Halo in 5yrs.

Another important factor is other people's ignorance. More people will have played Mass Effect and Oblivion than will have played Planescape Torment. Me and you will be in a minority (I think we are already). Sad but true.

The question is, if pepole will still talk about Halo more than a decade after the last game in the series will be released?
Same with Mass Effect, and Oblivion.

With Planescape we know the answer.

And about Deus Ex - This isn't a game that I liked because of the options, or gameplay, but strictly because of the story, and that's why Deus Ex still has that famous motivator pic:

For JRPGs this gen, you should look elsewhere beyond the Consoles.  Since the majority of actual 'innovative' ones aren't on Consoles and most of the console JRPGs seem to be the 'side series' or 'experimental' titles.  In other words, they're hit or miss. 

Games that are looking to do better on innovating the JRPG genre with new forms of gameplay and player interaction are titles such as Dragon Quest IX, Final Fantasy Gaiden and the new Lufia Remake.  Games actually on the DS.  The system Japan is obsessed about.  The only real console title that looks to have done anything different this gen is Demon Souls.  Heck, even some of the Console JRPG titles people obsess over like Tales of Vesperia and Lost Odessey are VERY formulaic to the standard JRPG formula.  This might also be why many people think 'JRPGs are stale'.  But then, those people are probably only playing games on the HD consoles, where JRPGs are predominantly on the handhelds now (DS and PSP).  And, as I've shown, the more original JRPGs are on the handhelds.

First off, you have no idea what JRPGs I've played.  Secondly, your post makes little sense.  I assume your criticising my assessment that JRPG story can't compete with movie/book story.

Movies are a non-interactive form of entertainment.  They are mainly story driven (also flashy effects driven, but they tend to amount to bad movies).

Books are a better example of what I am trying to say.  They are also non-interactive, just like the story of (most) JRPGs.  When I say non-interactive, I mean the story progresses in such a way that the player has no (or little) method of changing it.

Great video games have a hard time competing with great books or great movies when it comes to the story.  I would say it is impossible to compete with books and movies.  Why? because story is the only thing a book or movie has to worry about.  Video games have to worry about programming, design, graphics (yes, I know movies have to worry about this too), testing, gameplay, etc.  In other words, the games that are trying to focus on story will be outdone by a good book.  Period.  I don't see why anyone would try to argue this.

WRPGs tend to have a story that is interactive.  By that, I mean that you can guide the direction the dialogue and story goes.  That is something a non-interactive medium, movies and books don't do (or don't do well.  Choose your own adventure books tend to suck).

If you would've played games with really great story you wouldn't have said that statement.

Especially the movie statement, there are several games with plots that are better than the plot of every movie ever created.

Oh, and almost every time, a WRPGs stpry isn't interactive, the twists are the same twists, the characters are the same characters, the ending can sometimes be different, but the ending doesn't reflect the story up to this point, I can give you KotOR as an example for this.

So you've played every game ever made and seen every movie ever made?  Pretty much, you're calling his statements arrogant and countering it with an absolute statement that's more arrogant than his could ever be perceived.

The simple fact is, video game plots and movie plots shouldn't be compared as it is.  Not only are they completely different mediums and hardly comparable, but they focus on completely different modes of interaction.  Where movies are a passive interaction medium people watch but are driven almost entirely by the story and video games are an active medium the user plays which have a whole host of secondary parts influencing not only the story but the users influence (such as the visuals, interface, audio and most importantly, the gameplay itself).  All of this aside, there's just the simple fact that a movie plot is usually between 1-3 hours and a game plot can range anywhere from 10 minutes to 200 hours.  And that same 10 minute plot can arguably have more substance to it than the same game which has 200 hours of dialogue and cutscenes (such as an MMO).