It’s often said that Final Fantasy VII is the pinnacle of the franchise. Whilst this is completely subjective, the recent announcement that Final Fantasy X would be released in HD has spurred on fans who want to see a remake of the PlayStation 1 classic.
Tetsuya Nomura, long time character designer and director, has stated it’s not a priority. He acknowledged that despite fan demand, the Japanese developer would prefer to create a new experience than remake an old one.
He finished up the interview with some Final Fantasy trivia; noting that Yuffie (an optional side character) was initially a wanted felon. Whilst in Midgar, wanted posters would show her face; each would be different and the last poster you saw would be the Yuffie who joined the party.
Long story short, Square are not busy remaking Final Fantasy VII because they want to make something better than it.