This is so true... Dissidia Final Fantasy and Super Smash Bros Brawl seem to be the fighting games with the worst plotlines. In SSBB, the characters we learned to love throughout Nintendo games just end up being trophies without history, without identity, just bond to fight forever. But it doesn't really matter because the story isn't very important and doesn't take 4 hours of cutscenes.
In Dissidia, the characters have a past, but they can't remember it, but it seems they do, or not, and you're freaking confused! I'm sure they could have made a good crossover.
Also, I think they have ruined the character of Terra, who I personally like. In Final Fantasy VI, she has doubts, but then she grows up and kicks Kefka's ass. In Dissidia, she does nothing but doubting and she needs to rely on an underage jerk (Onion Knight) to find the strenght to kick Kefka's ass...