"Sit down and DRINK your DAMN TEA!!!"
Omg this part of the game is so cool. It's like a little mini old fashioned sci-fi movie of its own lol. xD First thing you'll wanna do my friends is realise that this didn't actually SOUND ANYTHING LIKE THIS SONG. This is just a triiibuuu... oh woops, sorry I got a little distracted by my music while typing that. Okay back to FF7.
First let's go collect everything.
Go talk to the old man standing in the middle of Rocket Town a couple times. You'll both look at the rocket, and then he'll give you the Yoshiyuki, a sword for Cloud. It doesn't have anything to do with Super Mario. But it does have a decent attack stat at this point in the game. It only has two Materia slots though so I wouldn't bother actually equipping it for the moment since we wanna earn AP for our Materia.
The bottom left house is a weapon shop that sells the Shotgun which STOPS BEING SOLD later in the game, making it a permanently missable. By golly, be sure to buy one.
The middle house next to the old guy sells this Materia, which you don't yet have. It has a spell, Remove, which will be useful much later on for catching Chocobos. So I'd say equip it now so you gain AP for it during your adventure.
At the same shop, you can also buy Barrier Materia, which WOULD be one of the most useful Materia in the game. Except we already have the Enemy Skill Big Guard from earlier, which casts Barrier, MBarrier and Haste all in one go. Still get one though. It's useful in the Battle Square if your Enemy Skill Materia gets disabled, and you need it for Master Magic laters.
The house on the right has a Power Sauce, which goes nice on a sandwich. And when a character eats that sandwich, they get a +1 in Strength. Okay there's no actual sandwich involved I am just being daft like always.
It also has the Drill Arm, an okayish weapon for Barret with four double Materia growth slots. You'll probably never use it. But take it anyway!
That's all for items in Rocket Town. So let's proceed with the story. Might wanna grab some popcorn. Head north in-between the two middle houses, towards the rocket.
Climb up the rocket, enter the door and speak to Cid. You'll learn a little about why he's so grumpy, and you'll get to give him a name.
Oh and congrats, because you followed this guide and recruited Yuffie and Vincent, by recruiting Cid also you now have every playable character in the game!
Exit the rocket, then head North to go back to Rocket Town. Even though you headed north from Rocket Town to get here. :D Weeeell, this is ROCKET TOWN. With space-stuff. Maybe the town and the rocket launch zone are in-fact connected by some kind of interdimensional rift?