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The game has been in development for many years already by the team behind Shadow of the Colossus and ICO, but Sony has only rarely commented publicly on the game. Several times in the past year rumors have cropped up suggested the game has been cancelled, however Sony has denied them every time.
However, recently, former Team ICO lead Fumito Ueda said in June that he was still working closely with the team on The Last Guardian (despite leaving the company a year before.)
Due to the common rumors of The Last Guardian's cancellation, it's tempting to jump quickly to the assumption that this is the final blow to the project: a stealth cancellation. However, we saw back in May that sometimes human error can lead to this issue as Ubisoft accidentally let their trademark for Brothers in Arms: Furious 4 lapse.
At this point it's a tantalizing story, but without many facts to back it up. We'll be watching this closely as Sony will likely issue a statement at some point in the near future. So far requests for comment have been met with the standard, "We don't comment on rumors and speculation."