First off, it was not in production for five years. Even if we take the E3 2005 target render for a start time, it'd still only be 3.75 years, so you're off by at least a year, but GG was working on Killzone: Liberation until 2006, and this is when their team was < 40 people, so it's not unlikely that Killzone 2 was not being worked on until completion, or near completion of KZ: Liberation. And that would explain why it was not seen at all at E3 2006, because there was nothing to show. And then it was shown at E3 07, because they had actually worked on something that year, so it's wholly likely that the game didn't begin work until mid-late 2006, and was complete by mid-late 2008 when it went into Open Beta, and many outlets had already received review code. So I will go with the idea that it was in development for 2 - 2.5 years.
Anyhoo, No one aside from SCE and GG knows how much the game costs, so this whole thread is covered in rumor and speculation. And like Sony, I do not comment on rumor and speculation.
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