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Ninsect said:

Yes? But that has nothing to do with the money MS were willing to pay for it. PLUS, the deal was made before the consoles launched so they had no idea how this gen would play out. They probably thought, like so many did, that MS would build on 360's success and manage to lead the generation.

Why do people think it has anything to do with MS allowing them to keep the IP. Why wouldn't Sony do the same? 

Because they said as such, like right here.

So basically Sony wanted to keep the IP, Microsoft was willing to let them keep control of the IP.

People who keep throwing out "lul itz money1!" are missing the point. You can reduce everything down to money in business. Why does Naughty Dog make exclusive games for Sony? Money. Whether Insomniac was going to bring this game to Sony or to MS, money would have been involved. But they chose one over the other based on the ability to keep their IP.