Sounds like Konami might have taken the Coded Arms: Assault criticism to heart. The latest rumor suggests that the PlayStation 3 FPS has been canceled. Most reports indicate that Famitsu broke the news, but there has been no official confirmation form Konami. The rumor can be traced back to German site GameFront.
GameFront's original entry is short, and reads (as translated by Google): "The Shooter Coded of arm: Assault of Konami is to appear allegedly no more. That comes out from Japanese trade price lists. Konami did not express itself to the report yet and the attitude of Coded of arm: Assault so far officially does not confirm." From this, it's unclear how Famitsu became involved in the rumor. Perhaps the Japanese magazine published its own report based on the alleged trade price lists; or perhaps Famitsu has been wrongly tied to the cancellation rumor.
True or not, the loss of Coded Arms would hardly deal a crushing blow to PS3's image. Good riddance. (May we remind you that there are more important Konami titles at stake?)