Whether it "did better" could be debated. Statistics are complicated, not black and white. I've seen charts where FFVII is higher and others where FFVIII is. FFVII also has an advantage because it's older. But I don't know anything so don't yell at me. :p
And come on people, enough of the "_____ is the best and _____ SUCKS!!!" It's kinda immature...
I think Square-Enix chose FFVII because it was probably just easier somehow and like people have said, FFVII was more open-ended than FFVIII. Plus the graphics have more of an impact because they're so much better than the game's while FFVIII's was already pretty realistic. I don't want them to remake anything, it'll make me sad. :(