sure they've spent many many millions on these engines, but I think it will be for the best in the long run.
The great thing about the PS3 design appears to be it's scalability, with the possible exception of the RSX.
This means that all the PS4 would need to be is a beefier PS3 with perhaps a faster Cell with more cores, more and faster RAM, bigger HDD's to work with. Essentially allowing the use of PS3 engines to work with PS4 should in theory be not much of a problem, perhaps just needing tweeks here and there and the inevitable improvements these engines go through in time.
This will allow more games to be made more frequently than on the PS3, no more weak software at launch blues.

expensive engine now = cheaper development for the future imo

There might be more games using infamous engine in the future.

Killzone engine is more or less certain to at least be used for KZ 3 (will probably come at the end of ps3 lifecycle like gow II done)

Uncharted engine is already in second game and Imho there will be at least one more game on it this gen

LBP is too unique to share engine with other titles (and with the amount of milking they do on PSN this probably is pure profit already)

Insomniac people already told

GT5 will be big enough to have own engine

BTW you forgotten there's also probably GoW III engine :D

PS2 Engines can't be used or updated for PS3 but if PS3 and PS4 use a similar tech and structure next gen instead of another Huge upgrade in HW then that should fix that issue.

Can you imagine all Sony's first party games running on the Unreal Engine?

There's already a problem this gen with dozens of games looking similar to each other, despite having different devs, because they're all using the same engine.

Creating an engine from scratch allows the devs to create a truly unique looking title that effectivly has it's own identity as a result.

Mirror's Edge is based on UE3 and it doesn't look similar to any other UE3 game AFAIK.

ME is more of an exception than the rule though, IMHO.  A lot of U3 games do look similar, in the same way you could tell when various ID engines were running under something.

Using engines is a great way to cut costs, but it can result in games looking similar.  Funnily enough ME is a game I think would have benefited more from a custom engine due to its nature - using Unreal Engine I think resulted in too much of a linear set of levels vs more of a sandbox engine like GTA IV or Assassin's Creed.

It did look fabulous though in terms of the colour scheme and textures I thought.

I think that due to PS3 architecture, at least initially, didn't lend itself well to engines like Unreal, as many games poor performance on the console (at least initially) testified.

I suspect that's because when developers reuse an engine, they usually just work with it in the easiest way possible. If they went a bit further to customize the engine as Mirror's Edge developers did, it would probably not be too expensive to give their games an original look.

In other words, there should be a middle ground between the two extremes of making a whole engine from scratch and reusing a whole engine without any customization. Mirror's Edge got it right.

 that will be awesome if PS4 use similar architecture as PS3 so the research and effort done on PS3 will be reusable ... and also game will start appearing on PS4 much earlier in its lifecycle.

It also means backwards compatibility is free or almost free, as in the Wii.

That unstability has nothing to do with the engine. You can't use engines wrong. Either they work or they don't work. Bugs you are referring to are related to game logic and thats something that isn't in engine. Btw, doesn't Mass Effect use U3? (And Fatal Inertia, Fury, newest Larry, etc.) Of course you can use flat side of axe to cut down trees. It does work, but performance would be quite bad. :)

Spankey:

So it would be a good if in the future there would be PS4, which would use only Sonys engines for PS4 games, because making one would cost too much?

(Or if they would put similar hardware to PC, anyone could use just about any engine there has been made for PC.)

Dallinor:

Problem is that most developers use the default stuff that is in the engine and do not care about making anything own instead. For example that bloody screen that is just about in every fps today. Devs could easily disable it and make something more innovative.