"Considering the amount of work to make graphics that deserve HD, it is hard to make towns in the conventional style," said Toriyama.
Final Fantasy VII used pre-rendered graphics when it launched in the mid-late 1990's, and layered polygonal characters on-top. Square Enix's point of view is that the amount of art-work required to recreate those towns in HD would be extremely difficult.
Kitase agreed, stating "it is very hard to make games on PlayStation 3 in the same style the games in that era had. Making graphics will take enormous time."
Apparently, this is also the reason you won't be seeing any towns in Final Fantasy XIII. Nothing to do with the XBOX 360's disc limitations? Hmm.
Time to let go Final Fantasy fans?