In their way they are. I think OiF pretty much just corrected some plot holes and filled in details missing from Ys III. In THAT regard, it's the more valid canon via the whole retcon rule... but I don't think OiF ever directly contradicts anything that occurs in Ys III, does it?
Most of the changes are later in the game, but there are a few key ones (McGuire's fate, Abduction of everyone in Redmont, the ending) that are fairly contradictory. I'm trying to be as unspecific as possible to avoid any spoilers.