Earthworm Jim for PSP has been put "on hold" as Atari focuses on other projects. Sister site PSPFanboy reveals that the game they thought was coming along fine with "sharp graphics, and awesome 2D gameplay potential" is no longer in the works, but an Atari spokesperson says it "may be revisited in the future."
Optimistically, there's still 60 reasons to own a PSP. Maybe some information will shake out at Min-E3 over why Earthworm Jim got the bird. Atari still has other titles coming out for the PSP, but a lot of their energy (and money) is currently going into upcoming potential hits like the return of Alone in the Dark.