I think Final fantasy 8 is perfect as is.
I'd rather not see a sequel as it the chances of it ruining the story as it is now are greater than it contributing to it. If they were to do it, it would have to be with with the main characters children (but this would have to be really great to avoid joining the 'done to death' sequels that work this way). Or they'd have to go with a parallel story like in Kate Lorraine's "Mist over Winhill" (I forget the exact name, but it's a brilliant story, be sure to check it out) Either way it'd be hard to pull it off correctly and while if anyone can do it, it would be SE...I still have a rather large share of doubts
A prequel could work but I'm still not (all) for it.
Now if they were to make ff8 into a 3hour long movie that would work, and get a lot more people to appreciate the story maybe.
But I'm all for a remake ffx style graphics and such *drool*
I just hope it's not on the gc but just on PS2...else I will have to buy a gamecube