The whole concept of Fal'Cie makes no sense [Full game spoilers]

[Cloudane]

Bingo. I think you just hit the nail of what I consider to be the shining part of this game: the characters and their development. The story, in hindsight, was a bit of a mess (although it introduced nice memorable concepts like the pretty darn evil l'Cie slavery) and if you had it on fast/auto-battle it was almost leaning towards a hack-n-slash... but as a character piece with all the conflicts, resolutions and development I thought it was up there with the best. Not quite to Cloud Strife levels of complexity, but that would take some meeting or beating anyway.

And the characters do have a HUGE impact on whether I like or dislike a game as a whole, often more than the game itself. (This also explains why I disliked XII so much, even though the gameplay was pretty cool and the story was.. reasonable).

I wouldn't say even this is perfect (Snow and Lightning were weak characters IMO) but I would say it's one of FF's far better offerings in that department.

If examples are required
(SPOILER)
Hope going through his grief, from intense anger to eventual acceptance - although there wasn't as much in between as there should've been, it was nice to watch. And at the same time going from quite a coward and a negative person to the one who would be pushing the party forward and raising their spirits (in fact I'd say Hope was one of my favourite characters. YMMV)

Sazh going through various levels of despair and running away, to the same kind of murderous anger (out of character but understandable in the circumstances) to a certain amount of acceptance and hope etc.

Vanille's lies and hidden truths, really a refreshing change to see what's underneath the irritating happy-go-lucky exterior that at least one female character always has

Fang always appearing very firm and confident in her standpoints, and yet switching that standpoint a couple of times in the game as the cracks in her certainty appear. There wasn't bucketloads of in-your-face development, as this character was done a lot more subtly than her demeanor but it's all there when you read between the lines. She's also plain cool.

Snow - okay, one of the weaker ones. One track "hero" mind. He did seem to mature a little as the game went on... call it subtle.

Lightning ironically was probably the least interesting character IMO and didn't change as much as I'd have liked (smile properly dammit!) but did basically screw her head on and stop being heartless - well the character's like an unfinished homage to Cloud or Squall I guess.

On the NPC side of course you have the obvious internal/loyalty conflicts of Rosch, Cid et al.