Xenosaga became its own thing pretty quickly. Given that Square owns the rights tO Xenogears, Takahashi and crew couldn't very well actually do the episodes detailed in Perfect Works.

What's more, the six part Xenosaga saga was supposed to be split into two "arcs" with the first three games focusing on Shion.

Of course there are plenty of allusions but no outright connections. An example would be Mai in XSIII - she is pretty much a Maria clone. (They were both total cutie pies.)

I would have loved to see Episode IV of Gears but Xenosaga was never going to give us that so I'm not gonna hold that against it.