Call my a conspiracy theorist. However its a thought worth considering. Perhaps the titles development resources have been scaled back. Square hid none of their dismay last year with the sales of the PS3. They went so far as to criticize Sony for their high price point, and for their poor marketing of the machine. There are valid financial reasons to direct more assets elsewhere.
Square wants to make as much money on their game as possible. They are not developing, producing, and releasing the game merely to sell PS3s for Sony. They want to sell their product first and foremost. This isn't about what is good for Sony or their brand. I know a lot of hot blooded fans have a hard time separating the two.
Square will simply have better sales of the game if they release it only once the PS3 has reached a critical threshold in regards to the user base. Which in Japan is still incredibly small. They may see this, and may have seen it last year. So they possibly cut back the development resources delaying the game for a few years waiting for the console to get on its feet as it were.
The answer to your question is that development is probably crawling along, and they are not as far along as you would think or hope.
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