I suppose to Konami, while Suikoden really is a very successful series, Silent Hill is their bigger cash cow. I don't doubth that if it were Silent Hill heading up against KH2, KoA would've gone ahead with the release.
The RPG genre while very popular in Japan, still struggles competing against the more mainstream genres in other countries. In the past everyone was happy with 32 bit/16 bit sprites.
Now, since the advent of FF7, everyone expects and wants fantastic graphics, awesome innovative combat systems etc etc. Like someone else said, if the Japan gamers aren't satisfied, there's not much of a chance that the fussier, Square-Enix spoilt American gamers will be. (as this song so accurately depicts)
Square set a standard, but Suikoden's strong points aren't on the same playing field (let's face it, the story was great and enthralling, and I love the characters but nobody liked 3's war/small scale combat system) as the oh so popular Square RPGs (focus on the flashy!). It's still leaning towards the niche beginnings of the RPG genre.
