It would be disasterous for Sony ...
Even if third party publishers are cutting back on development there are still (probably) hundreds of games under development to be released in the next 2 or 3 years. These games would be under production from almost all of the biggest publishers in the world and each would represent a multi-million dollar investment. Sony dropping the PS-Vita now would create serious problems with all third party publishers.
Beyond that, with the PS4 coming out Sony needs to keep their early adopters and loyal fans as happy as possible and not give them any reason to wait and see how the PS4 will perform before they buy it. While I think most people will have forgiven and forgotten the early PS3 price cuts as long as the PS4 launches at a reasonable price, I don't think they would want to anger them by turning their $250 gaming device into a paperweight.
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