I was going to lay the smack down in this thread but Vivi22 beat me to it.

Actually, the DS has pretty much proven that old school gaming is still relevant and has an audience. I mean old school PC dungeon crawlers where everything is a FP view and you never see your party beyond their names and stats have been doing fairly well on the system. DQ itself is a game that has rarely changed in its history from a design point of view and it still outsells FF in parts of the world.

I feel 16-bit games still have an audience out there, and I feel that at this point in time, this comes down to what Capcom said when they made MM9 and 10. That they chose to make it retro cause it was the style they wanted. FFLegends and FFIV:TAY were purposely done in a 16-bit style, cause its the creative direction the director wanted. FFIV:TAY is a sequel to the DS version of the game, and yet he still chose to make it 16-bit and chose the cell phone as the platform, when he could have easily just used Matrix to build it as a DS title. SE itself has been pushing out lots of 8-bit/16-bit style games in their ports and whatnot, so I don't feel SE agrees with the idea that 16-bit can't turn a profit in this day and age.

As for my thoughts on why 16-bit FFs are so great? I like to keep things in historical context and ultimately it was the 16-bit era that actually shaped and created the FF series identity, and in many instances, several popular franchises that are still big sellers today.

In FFII, Firion, Maria, Gus, Leon, and the rest of the cast are characters, only so far in that they have distinct names and dialogue. In FFIV, Cecil, Kain, Rosa, Tellah, and Edward actually have backstories and events in the game that flesh them out as characters.

Firion's claim to fame is chased down by imperial guards and barely surviving to join the rebels, Cecil starts his game remembering the brutal slaughter of people and then begins to question if his home is truly the benevolent kingdom he was raised to believe it was. When placed into historical context, its obvious what IV did for the series. Hell, before FFIV, characters didn't have last names in the series.

So there is the historical contribution, but my other issue is that while the PSX generation certainly improved several aspects of the series, I felt other sections began to falter, that the 16-bit does better. FFVI is able to at least give some closure and character growth to 13 of its 16 member cast, sure its not as detailed or its quantity of moments is less than some characters get in later titles (i.e. one character gets at least two moments in the game just about them, as opposed to a later installment where the plot may actually revolve around one characters problems) but it was still able to do so while later titles can't even give a fair closure or screen-time to its cast of six characters.

I also find the dungeons more involving in earlier games cause they are actually gameplay specific set pieces as opposed to being visual canvas for the story. The Lodestone Cavern in FFIV or the Ancients Tower in FFIII are more entertaining dungeons than the Lunatic Pandora in VIII, Macalania Woods in FFX, and most of XIII's dungeon cause they were designed for gameplay, not some set piece for the story. I feel the ratio between story and gameplay has shifted in the series, and I personally feel the 16-bit era is kind of the happy middle ground with FFVII included.

I feel VII ultimately falls into some of the problems of the 16-bit era, but it brings about also one of the bigger problems I have with the later games. Using the scene from VII you quoted, you could easily condense that dialogue, both characters often repeat sentiments made before in the same conversation and even references things the player has already seen and heard in the game. The dialogue has more repetition than it really needs. Granted, I feel this scene is better than some later examples in the series like FFXIII... (please, you don;t need to remind me every cutscene how screwed you people are, and how unfair it all is, we got it the first 20 times you said it... we get it, being a l'Cie sucks, now stop your bitching)

My point comes back to the difference between the Celes scene and the Cloud/Tifa scene is that the player is given more responsibility to understand the content and context of the moment in the Celes scene, whereas the scene in VII leaves little to the players imagination cause it repetitively verbalizes what the characters are thinking and feeling. The scene in VI is the player taking the role of Celes, whereas the scene with Cloud and Tifa is the player watching them. Both have their strengths and weakness as medium for story telling, but I have to be bias towards VI in this because the scene asks more from the player whereas VII's scene is pretty straightforward about what the characters are trying to convey and leaves little for the player to think about. You just take it for face value, you never really stop to think what the characters are thinking cause they already told you. I feel this is the difference between watching a story and experiencing it, cause part of what makes the story special is what you bring to it.