If Team Ico's past work is any proof of quality (Ico and Shadow of the Colossus), The Last Guardian will be a work of art.
Unfortunately, it's a work of art that has been long overdue. Originally revealed in 2009, The Last Guardian was expected to be released in 2011.
Two key departures (although designer Fumito Ueda has agreed to stay on until the end of the project) and no new announcements are worrying signs about whether The Last Guardian will ever see the light of day.
Recently, it's come to light that The Last Guardian trademark has been cancelled. There's no need to panic just yet, as it doesn't mean that the project has been cancelled. Rather, Sony's allowed the trademark of the game to expire, without renewing it.
Sony has up to three years since it received the Notice of Allowance—back in January 2010—to renew the trademark, which will be January 2013. Since The Last Guardian is unlikely to make that time, the trademark expired and someone at Sony just neglected to file for an extension.
For now, don't worry just yet about The Last Guardian being cancelled. Sony has plenty of time to file for an extension to keep the trademark.