If this was true, I fail to see how someone could feel bad about news like this (this rumor isn't proof of that). I'd feel really bad for the development studio and the people involved with development, as they invested tons of time in a project that ended up going nowhere. That would suck a lot.
But from a consumer perspective? This game has been on the verge of either existing, not existing, it still exists but its being worked on, probably not existing, we'll tell you more later, going to be shown or re-announced, it really exists for real guys, it actually hasn't existed for quite some time, no it really exists.
What does Sony gain from keeping this shit in the dark? If its not shown at this E3 or TGS, jesus fucking christ say something about its development.