I kinda think that a lot of people had Xenogears in mind when they played the game. Honestly in my opinion XS doesn't even begin to compare to XG in terms of gameplay, characters, world, and story. It just doesn't. XS beats it out in graphics. The Gears in XG were a great part of the game and were very usefull even when you didn't have to use them. The AGWS are just a pain in the ass no matter how you look at it. They are slow, no way to repair the damage when you need it. You are better off outside of them at times. Characters like Ziggy and Momo were interesting but that was it for me. The female lead in XS was just so annoying, especially her coworker.
Maybe XS is and was the result of them trying to draw out a story over several games to get more money.
I've heard about the unofficial prequel thing in relation to Xenogears. Should be interesting to see what happens in the story if they reach the point where XG was suppose to take place. Personally I'd like to see Square-Enix build off Xenogears themselves.