To be succinct, the US version of PSIII, had the game only take place 1000 years after PSIII's events.
The Japanese version, had the game take place 2000 years after PSII.
When you think about the game, when it takes place and the events that transpire, what year what date and year do you go by?
Personally, I follow the Japanese one. It just makes more sense.
The only thing does not make sense, is that there is still a Dark Falz. But then again, I think there will always be one. You cannot have light without darkness.