Blue Dragon, Lost Odyssey, Eternal Sonata, and Tales of Vesperia (don't forget Resonance of Fate!) were all products of MS throwing ridiculous amounts of money at JP devs in order to try and get the 360 off the ground in Japan. The creative freedom that having someone else pay for your games development led to some interesting outcomes, but they largely didn't click with JP audiences, and most of those games were big disappointments. The lack of success of those games/the abysmal sales of the 360, coupled with the general high cost of development in that era and beyond for home consoles led to most of the creativity in the JP RPG market to transfer over to portables. If you compare what was happening on the DS/PSP/Vita/3DS from those eras, there's TONS of creativity in those spaces.
The PS3 was no slouch in that era either, and I'd attribute to a lot more success in moving the genre forward. Demon's Souls was a PS3 exclusive and kicked off the entire Souls franchise. Ni no Kuni was a PS3 exclusive. Dragon's Dogma started out PS3 exclusive. White Knight Chronicles, Valkyria Chronicles, 3D Dot Game Heroes, all of the post-Vesperia Tales games, Final Fantasy XIV, PS3 had a pretty decent showing.