Final Fantasy Versus XIII has been temporarily suspended and its programming team transitioned into assist mode, according to a translation of a Famitsu interview with Versus director Tetsuya Nomura (scanned here). Nomura explained that Square Enix's top priority is completing work on Final Fantasy XIII, which means the Versus team has placed its project on ice and headed across the hall to lend a hand. A few remaining designers are still working on conceptual art for Versus, and the story is supposedly complete. Despite the stoppage, Nomura did confirm that Versus will still be featured at Square Enix's pretentious, invite-only "DKΣ3713" event in August, alongside Plain Old Final Fantasy XIII, in non-playable format (read: "a minute of ambiguous footage in a closed theater").
Update: Square Enix has denied the report, but has confirmed that staff members from Versus are aiding FFXIII's development.