Agent, Nobuo uses a basic General MIDI keyboard when he compose his music. Some of his themes are orchestrated for cut-scenes and stuff but most of them are composed using his keyboard.
Taken from an interview during the FFVIII era:
"Nobuo Uematsu: I usually come to work on time, turn on my keyboard, and then decide to work. I don't have expensive equipment in my room. I have a hard time trying to learn new machines, so I stick to my old ones. It's a waste of time to go over the manual, search my harddrive, or go get a floppy disk just be trying to find a single trumpet synth. I could be coming up with a great melody in the very moment! The only instrument I used is the "Roland SC88", which is a beginners' synth wich costs about 50,000 yen. (about 400 dollars) Just one. The maxium simultaneous sound is like 64 or 128, and I don't need to worry about quality unless I want to have a special traditional instrument. I cant say that its symphonic recreation is the best, but it has most that I need. The best of all, everything only costs 50,000 yen. I hear that people say that "Nobuo is surrounded by computers these days", but the truth is that I'm really bad at computers."
And here's a part of a review for the game:
Using synthesized MIDI is very typical of the Final Fantasy games. Later games (FFVIII and FFIX) still employ the same synthesized sounds, even though other RPGs used recorded music. There were actually ideas to use a famous vocalist to sing a song for the ending of FFVII, but the team couldn’t come up with a good reason to do it, so the mandatory pop song didn’t appear in the series until Final Fantasy VIII.
Cover art of the FFVII "Reunion" soundtrack. Note the Digicube logo on the top-left cornerThere was one exception to the synthesized formula in FFVII however. The final boss battle with Sephiroth uses Latin chants layered over the MIDI theme.
taken from here:
http://xenon.stanford.edu/~geksiong/papers/sts145/Squaresoft%20and%20FF7.htm