Yoshida responded at the Tokyo Game Show by saying that Jack Tretton threw those words out there and that the game was never on a hiatus.
"Hiatus, I never... It was Jack Tretton! He used that term, and I said no, hiatus is misleading. It was a hiatus in terms of releasing new information. The game has never stopped - the team has always been here. They're going through the re-engineering of the game, so the team size is smaller, because it's more engineering focused right now."
Yoshida reiterated that despite the smaller team, the game is development.
"We're waiting for the right time to re-introduce The Last Guardian in an appropriate way. I can't... Well, the game is in development, and it's well staffed, and Ueda-san is here, working - even though he's not a Sony employee, he's dedicated to the product. But we're not ready to update yet."
The Last Guardian which was announced at E3 2009 and was suppose to release in 2011 on the PS3, however was delayed. Since then not much has been said about the title other than hints of gameplay and plot and this recent announcement that the game is still in the development stages.
via IGN
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