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Its not realy a controversy, the game has been in development hell for long and aparently sucks real bad.

ihatefatkatz said:
It's disrespectful to not publish it. How will you convince other studio's to partner with you, knowing that they Big N might not even fulfill their end of the bargain. 

You've committed to funding the game, so it is only logical that you support it to the very end. Even if you got a shitty product on your hands

Simple, dont make a stinking pile of poo. If youre getting Nints to fund and advertise your game you have to at least make it decent, its not liek youre having financial issues and not getting the word about your game out there. If the dev completly botches the thing than I see as the right of the publisher to pass on it, afterall its theyre money funding it anyway.