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http://blog.wired.com/games/2007/07/fatal-inertia-o.html

Here is the article the site references. As URNotE has pointed out, Epic and Sony are tweaking the Unreal Engine 3, so this game has been delayed for the PS3. Basically, the are making a custom Unreal Engine based off of 3 that will utilize the SPUs and RSX better. My guess, they will somehow incorporate the new Edge tools. Should be interesting, although I do consider this more "bad" press of losing yet another exclusive for Sony.