That was basically the original conceptualization. It didn't work too well and was modified. IIRC, that political configuration has a history of failure whenever tried. (Maybe someone who is more of student of political history can elaborate. Not my strong point.)
I'd say power centralised at the Federal Government because that's what power tends to do -- it tends to centralise.
Those who have more power tend to find ways to use that power to (always with the very best of intentions) to obtain more power. Whenever the Federal and State governments argue about who has a certain power it always winds up looking like a wolf and a chicken arguing about what's for dinner.
Power does not always centralize. For instance the long-term trend in Canada has been towards decentralization. According to the Constitution there are many things that the federal government has sole responsibility for that in practice have been moved to the provincial level (with the blessing of the federal government).
As I said: I am not much of a student of political history. But my general understanding is that the very name "United States of America" came from the idea that these would be separate "states" -- nations -- that would band together for certain specific purposes, like defense, but would otherwise operate independently. The problem came in that the Federal government had insufficient power to raise money (or an army) to perform defense. More power had to be ceded to the Federal government in order to ensure that the entire thing didn't simply fall apart. As a young nation, newly separated from England by force, the US was quite vulnerable. Had the Federal government remained hamstrung in its ability to raise money and raise an army, this country likely wouldn't have survived for long.
