Free Radical didn't decide shit. Free Radical had three versions in development, and allegedly, as of March 2007, all three versions were at roughly the same point in development, with the PS3 having a marginal lead due to its status as lead development platform. I'll be a red haired monkey's uncle if I'm going to believe that FRD decided to just bin two functional versions. And judging by the attitude of at least the project lead, I have an equally hard time believing that FRD would instigate a PR exclusive scheme, knowing that it'd confuse, disappoint and ultimately piss people off. I also don't think it's a coincidence that, shortly after this exclusive shit hit the fan, said project lead announced that he'd no longer post on the official message board.
But, never mind this. Focus on the real questions, although I for one would definitely love to at some point see an honest post-mortem on this matter.