Do people constantly ask for FF7 to be remade because it is totally garbage when played in a modern context?
Sort of. Depends on what you mean by "garbage" because as far as gameplay and story goes, it's not really any worse than some of the things we still get today (FFXIII anyone?)
Graphically, well, yeah it's the first PS1 FF, a lot of PS1 games could use an overhaul. I still maintain that it has some really nice looking pre-rendered environments, though.
There are a couple of reasons FFVII would be my choice to be remade.
1: Better translation. FFVII has a really poor English localization. Spelling and grammar errors, along with phrasing that makes a lot of dialogue make no sense. A lot of the detail of the world is lost due to these errors, and some of them are so obvious that it's unforgivable that they got by in the first place (This guy are sick.)
2: Introduce new generation to a solid RPG while simultaneously refreshing some older gamers on how the game and characters really acted. Thanks to horrible spinoffs, a pointless movie, and general Internet forum hyperbole, things in FFVII are rarely remembered accurately. Cloud isn't a mopey crybaby. He starts off a cold loner but becomes a pretty loyal companion to his friends, and even has a decent sense of humor. Aeris isn't an innocent princess. She was flirty, energetic, and liked dangerous adventures. Ideally the remake would forget anything in the FFVII compilation exists, and just focus on the game itself and retain these original personalities.
3: This is a more personal reason, but it was the first really cinematic game I ever played so it'll always hold a special place in my mind. Seeing things that blew me away when I was 13 in a fresh new way might reinvigorate some of that nostalgia. There aren't many games that blew me away like it did.