Scott Rohde, head of software product development at Sony (apparently), has updated his Twitter to say that this isn't true:
https://mobile.twitter.com/RohdeScott/status/475515804067569664
He said: "and I laughed at this rumor over dinner. The Last Guardian has NOT been cancelled"
To which someome aptly replied "But never being released either." Zing.
Honestly, I've been expecting the cancellation news for some time and wouldn't be at all surprised if this denial is just Rohde trying to save face for Sony this weekend before E3, only for the announcement to come out quietly in a few weeks. Fumito Ueda's departure from Sony started out as a rumor until it was confirmed as well.
Even if it's not canceled, with Ueda's undoubtedly more limited role -- as well as the departure of the game's executive producer at the same time Ueda left Sony, and the ongoing development hell of this project -- does anyone still have high hopes for it? I don't.
"ICO" and "Shadow of the Colossus" are two of my absolute favorite games, but I feel like "The Last Guardian" is forever going to be summed up in "what could have been."