FFVIII is my favorite game of all time- I love it due to the feel, timing, setting, emersion in the story and mainly characters. But I'm not blind to the possible problems it has.
a) The junction system (which I love) causes people to draw on and on for hours, if they knew what they were doing better it might not, but the fact that so many people do thus makes it a much worse game for many.
a1) In comparison with this FFVII does not cause hours of such, you level up materia but never really forced to do much. The system allows a lot of customization though not quite as much and some fun combos. I consider these systems about equal but I can so easily see someone hating FFVIII's.
b) The orphanage scene was (looking only at the plot) a pretty crappy, somewhat cliched plot twist- I'll admit it it was pretty bad. However I loved that scene not for the story but the way it moved around the different characters and the way it developed along with the scene. Squall going around noticing things, Irvine finally serious giving a totally different entrance on his character (which we had seen flashes of before). This scene for me was great but not because of a good storyline touch. Again though I could very easily see someone calling this scene crap.
c) There are many attacks on Zell, Rinoa and Squall. A lot of these I discount as nutty. Ones like: I hate Squall he's a pussy, are stupid as they mean absolutely nothing and when you argue them the people fold (meaning have no argument or insult you. However there are arguments that Squall's character changed to quickly (again I disagree but you can definitely see how this opinion could be formed). Rinoa is attacked for various reasons though I've never in my reading of posts seen a real argument for this so someone else can say why. Though of course any of this might just be as simple as "she bugged me." Zell's hyperness made me enjoy him but there are people who dislike the hyper characters of FF.
d) Only learning about Ultimecia in the final disk felt a bit tacked on to me the first time through. There was no villian who captured your imagination in this game. Seifer was the best but he wasn't a villian he was someone who got caught up in a dream of power (and more). Also going along with the lack of an enemy that was done excellently the time compression thing felt tacked on and weak to many. I won't go into an explanation as it will take too long, but while I was fine with this it could feel weak.
Basically what I'm trying to say is: there are clear problems, I think it's a more problematic game than FFVII, but it has something else, for me at least, you see Squall's thought process and you feel you're part of it, he's far closer to me than any other FF character (Yuri from SH gets second) the other characters were made so marvelously, with the short but great development of Quistis to the fun, easy spirit of Laguna. This all culminated in a feel for this game that made it flat out superior to any other game I've played. And yet it's easy to see someone not being able to stand the parts I love or seeing a different angle on them where I will admit it's pretty bad. And FFVII has a lot going for it. Sephiroth is a villian who's amazingly done. The story is excellent and the characters are very good. I love places like Midgar, the social structure, the feel of it and the individual parts make it a very interesting setting (and my favorite part of FFVIIAC). It has a ton going for it and has two of the most popular characters of all time- Cloud and Sephiroth. I also want to mention before I finish this post, Cait Sith is an excellent character, yes he betrays you- that makes his character mean something in the context of the story, sure it annoyed me but it developed his character. He really cares about being part of the party and he does something he deplores to stay in it. Reeve seems something of a measly man surrounded by hard decisions and a moral code combined with not being able to stand for it- to me this made an interesting and well done character.
So yes I prefer VIII to VII but I don't think it's better in every way and I think it's much easier to find fault with. As I opened with it's a love or hate game more than any other FF.