It's a mix of things really.

People have "grown out" of actual RPGs and want everything fast paced action games which is why RPGs as of late really lost their charm, you could say Square lost some good talent, but they still pushed out good games. FF itself is a victim of mainstream gaming, not so much who left, because for the most part everyone who made FF what it is, from Art to programming is essentially still a part of the team or still willingly works with Square for some projects (i.e Nobuo.)

Also while VII had character growth, XIII's characters were a bit more human compared to the usual protagonists of the series.