It's almost exactly what you expect. It's a great FF game. OTOH, it's FF and suffers from all the usual weaknesses.
The downside of course is the same downside to all FF games. Dialogue is all bad Goth poetry, and there's a **** of cut scenes. (More that Xenosaga even)
The DMW slot machine that most complaints seem to be leveled at isn't that bad or intrusive. And in some ways I kind of prefer it to your rhythmic button mashing nonsense that seems to be popular sometimes. (Magna Carta I'm looking at you.)
Having said all that I'm only about 4 hours into the game so it might get annoying, but so far it seems to be holding up as a reasonable game mechanic. One thing to consider that that yes we are on a portable platform, so it makes sense to 'dumb' things down a little bit.
On the characters... So far Aerith is super annoying, and Sephiroth isn't. (WTH?)
The main bad guy so far (Genesis) is an androgynous whiny emo **** whom I wish to kill, but since the story is so heavily scripted I won't get an opportunity to do so for a least another 25 hours, at which point I'll discover he's not actually the bad guy. I'll forgive him, we'll share an emo moment, and then we'll team up and go after the real bad guys.
There's a hottie red head Turk you get to hang out with. (mmmmm crazy red heads)
Early on you also get to go on a mission with Tseng, and you get to meet a 10 year old Yuffie. (lolicon alert!!)
The player character (Zack) is reasonable enough. Young, idealistic and stupid, but we all know that will be beat out of him by the end of the game. His character reminds me much more of Tidus (FFX) than Cloud. Probably 'cause Cloud shows up later on in the game.
Your mentor character Angeal is less well developed. you start off worshiping at his feet, then his flips sides within the first 90 minutes of game play with little explanation. Then he starts spouting bad Goth poetry as well. Yes this is obviously your plot device and part of the ever-present theme of redemption. So now the game is about finding out what turned Genesis and Angeal to the dark side. Genesis sees the error of his ways but is too far gone, Angeal isn't though and Genesis begs him to be put out of his misery. Etc... Etc... Ok whatever, just 'cause we can see where it's going doesn't mean it's not a good story or game for that matter.
On to the game play.
To quickly summarize it's like Tales of SomethingOnia controls with the game engine from FFXII. Visually it's FFXII which to me is great. Along those lines it takes a lot of cues from MMO games. You fight in the real world, not a stage with a pretty minimal lag/load for the game to switch to combat mode.
In combat there's an action button, dodge, and guard. Actions are selectable by scrolling L1 and R1.
If you want you just hammer on attack and bludgeon your foes into submission. Or you can cast spells, use items etc...
Spells and abilities are enabled by equipping materia spheres. (Done out of combat, you can't swap in the middle of a battle)
No there's no linking of materia, but you can 'fuse' materia together to level them up and combine attributes. So far it looks like a pretty flexible and cool system. Summons, limit breaks, leveling up of materia, and you are done though the DMW slot machine. Sounds gimmicky, (and it is) but it's really not that bad. It's obviously not completely random; you seem to level up when appropriate. And the more you use a spell / ability the more often it will level up.
Save games are still done at save points, which is slightly annoying. However they obviously clued into the fact that this is a portable game likely to be played in small chunks so the save points are generally never more that 10 minutes apart (or less) Also from the save points you have access to extra SOLDIER missions. They're good for 5-10 minutes of play with varying (but known) levels of difficulty. so you can stop at a save point, do some missions, level up if need be, hunt for items, but stuff at the stores etc, without leaving the area you're in and disrupting the main story arc. To me it's quite clever and suits the portable style of play rather well. You can play for 5 or 10 minutes at a time doing mini missions, or you can drop down on the couch for a got hour or so and advance the main story.
Overall I quite like the game. It's not perfect, but if you're a FF fan (FFVII in particular) and you have a PSP you're probably not going to be disappointed.