The only thing about Vagrant Story that could be improved (somewhat) is possibly the battle engine...it's still an RPG. The materials and affinities system is rather mind-boggling, and definitely hard to get to grips with, but the ideas are awesome. It has a MUCH better idea behind the system - time your attacks to keep a combo going, and in theory it's actually possible to kill a boss by chaining it to death without ever letting it attack - than most other RPGs. Even though I'm a pretty dedicated FPSer / shooting games-er, it feels just fine to me. Square knew what they were doing here, definitely.
I'm always a bit stuck on artstyle, and for me this is, looks-wise, just about the dream PlayStation game. Everything looks awesome in this game, and the somewhat surreal low-rez way the PlayStation renders things fits just fine. Compare the interior of any shop in Vagrant Story to, say, the MSPaint textures of Syphon Filter (especially the Washington D.C. downtown level...) and you'll be amazed how far your average Western-developed game has been forced to come in terms of graphics. You really get a sense of what the place seems to be like, too.