Why don't devs for once say, "We have made a piece of crap let's scrap it."

[elprincipe]

They don't do this because most of the cost is in development and not actually producing/packaging/shipping a game. If most of the cost is already incurred, they hope that they can just ship it and get some money back on it at least rather than just eating the whole cost. OTOH, for certain games (especially with an established series), this has to be weighed against damaging the brand name. I think that's why something like Starcraft: Ghost never saw the light of day.