I guess Sony saw no need to push in-house JRPGs when they were able to rely on 3P devs like Square and Enix to provide those games more or less exclusively to PlayStation by default during the PS1 and PS2 eras. So, if that were the case (and it was), why compete against companies basically doing those games for your platform exclusively anyway?
It's probably a similar reason why Square never continued Driving Emotion; why bother competing with the platform holder's own simulation racer when you're already on good terms bringing your JRPGs exclusively to them? Not to mention that game in particular was lukewarm when it actually came out, similar to The Bouncer.
Maybe there's still enough nostalgia for it? Depending on how things shake out this gen with Square-Enix, Atlus etc. potentially bringing more of their games to Microsoft and Nintendo platforms (and PC) in shorter release windows or even Day-and-Date (and in the case of Atlus, stuff like SMT seemingly being Nintendo-exclusive), Sony probably won't be able to leverage those same ties using platform exclusivity (or in some cases even timed exclusivity) as a differentiating factor when it comes to the 3P stuff.
Unfortunately Japan Studio is dead so they'd have to get one of their other in-house teams to do a sequel or remake, or maybe work with Bluepoint on it if they'd like. It'd have to be worth their while though so they'd just re-release the original game and try gauging where overall interest is at before deciding on any kind of sequel (and it would be a bit weird for a JRPG sequel to be developed by a Western studio, tho again Bluepoint got DS more or less right with the remake so they would be the best bet).