Microsoft's Press Release:
The difficult decision to cancel True Fantasy Live Online was based on a number of careful considerations, including the game's progression to date and the remaining development time needed to complete such an ambitious project. The MMORPG genre, across all patforms, has become an incredibly crowded and competitive marketplace. In response, Microsoft Game Studios has decided to streamline its portfolio, making fewer bets in the genre.
Level 5's (the developer of the game) Press Release:
True Fantasy Live Online was in development with the aim to be the largest, ultimate MMORPG experience...We anticipated that the game could not progress to a state where it could offer an original online game to everyone, and regrettably decided to discontinue development.