UPDATE [7/23/12]: Square Enix has confirmed that Final Fantasy Versus XIII is still in development, smashing the rumor of its cancellation to bits. On Twitter, Yoichi Wada went so far as to comment about the matter himself:
“It seems someone is spreading a false rumor about Versus being canceled. Heh, just a few moments ago a regularly scheduled meeting for Versus ended. If you were to see the city etc. presented today, you wouldn’t be able to stand from surprise, lol.”
We can now collectively sigh in relief, as Square Enix will still have its chance at redeeming the falling Final Fantasy name. If Versus XIII lives up to the hype, well, that remains to be seen, but at least we will get a chance to find out for ourselves.
Twitter (https://twitter NULL.com/yoichiw/status/227628674780909568)
NovaCrystallis (http://www NULL.novacrystallis NULL.com/?p=3120)
ORIGINAL (BUSTED) STORY [7/20/12]: Earlier today, Kotaku claimed that Final Fantasy Versus XIII was canceled sometime within the past few weeks. According to one of their sources, Square Enix “decided to let Final Fantasy Versus XIII die quietly on the vine and fade away, instead of officially announcing its cancellation”. Meanwhile, another of their sources claimed that Versus XIII had actually been absorbed into the upcoming Final Fantasy XV. That one seems more plausible, given how Agito XIII was renamed to Type-0 while the actual XIII series seem to be focused on the ongoing adventures of Cloud If He Was a Girl.
Of course, keep in mind that all of this is a rumor. Remember how everyone was excited about the rumored crossover with Star Fox and Metroid? Yeah. That was totally going to be a thing.
Source (http://kotaku NULL.com/5927645/rumor-final-fantasy-versus-xiii-is-dead)