According to IGN: "The company has allegedly made the decision to let the game fade away rather than officially announce its cancellation due to concerns over stock prices. There has been much speculation over the past year that the writing was on the wall after the title was conspicuously absent from conventions."
Final Fantasy Versus XIII was announced as part of the Fabula Nova Crystallis series of games which included Final Fantasy XIII, Type-0, and XIII-2. Square-Enix has no comment on the issue of the game, and Nomura saying that we should remain calm. The problem of why it could be cancelled it's because most likely working on sequels to Final Fantasy XIII, with the MMORPG XIV damaging the series reputation it is obvious that Versus XIII, which I have been waiting for so long has been cancelled. In my opinion, this really sucks that a game that looked incredibly awesome and the storyline sounding very interesting has been canned by Square-Enix.
Square-Enix has just become another Capcom to me. Final Fantasy XIII-3 will be announced probably on September 1st, 2012.
God Bless and Play Hard Gamers!