I'm just going to guess this is am FFXIV client-side bug that got introduced with a recent game update. I kind of doubt it's a server-side thing; your client is processing joystick input and communicating character position data and such to the server, but I doubt it's sending anything as fine-grained as joystick axes offsets.

Plus, I also play on my PS3 and everything is just peachy there. The issue seems to be limited to joysticks on PC in FFXIV.

Hopefully this gets sorted out soon though one way or another.