FFXIII is probably going to go down in FF history as the most divisive game in the franchise (possibly dethroning VIII for that particular honor), but I don't think it's a sign that the series is past its prime.
It's the plight of the modern game developer. Deviate too much from what's established, and you're strung up for "forgetting the roots of the series". Stick to the old ways, and you're crucified for "refusing to innovate". There's simply no way to please everyone, especially in an age when news travels fast and the loud and stupid are given soapboxes to stand on.
For what it's worth, I think FFXIII is a great addition to the series. There's a lot of talk about linearity, but come the fuck on, people. Be honest. If you've really played the old Final Fantasy games, you know what towns were really for: Inns and shops. Oh, sure, you might chat with the inhabitants once or twice the first time you arrive, but after that, it's strictly business. The games essentially boil down to a simple cycle: Grind, Inn/Shop, Grind, Inn/Shop, Grind, Dungeon, Boss, repeat. All FFXIII has done is boil that down into one smooth, streamlined process. They've done us a favor.