The sad thing is that it's the very teams who have hardly and chances of qualifying to the later stages (or to whatever is the prizing for winning a tournament), that often don't show up. When's the last time Belgium, NZ, Australia, Portugal, or even China etc have defaulted a game?
The throwing of $ to often poorer countries is also not really the right move as corruption will gobble most of it.
What FIFA should do, is to bring in (and fund) a wealth of experts in and help to develop the Island nations. Anything from coaching staff to administrators, logistics, match analysts... Pay for some experienced people to go in and improve the status quo.
But I'm not naive enough to believe this enough would do. But that's my best idea given the circumstances.