This is why I asked if you've played the original ToP or ToS. Most designs in ToP PSX were inspired from original ToP SFC, which focuses on cutesy than badass. Sprites and art for these games are more about cutesy than anything, if the SD characters didn't already clue you in.
If you think Efreet looks cool in ToP PSX, you should've seen him in ToP SFC. He was a flaming blob. Luna's neon thing is out of place, I'll give you that, the original didn't have that. But if she's so plain and not kickass enough, then how unimpressive is Shadow? It's a black blob with a Kodama face who turns out the lights and dudes get punched out of nowhere. They're all on the cutesy side, Undine is more like the exception.
As for Gnome, the rocket thing is retarded, yes. I guess bombs relate to earth. You don't have to like the sock looking things either, but I'll tell you that it was probably inspired by a character in the
Moomin series, the
Hattifatteners. They have a kind of kinship with the earth, so it was a good cutesy inspiration for Gnome.

Inagaki's page, ToP SFC's character designer:
http://members.at.infosee.../retorono310/TOPPAGE.htmlOnce you check out the art, maybe you'll see just how cutesy the tone was.