The game won't be out in 2012, but it also hasn't been cancelled.
If you never played 'Prey' then you missed out on a very cool early title for the Xbox 360 and PC. It used portals in a really interesting way – pre 'Portal' no less – and was generally considered to be a unique and interesting game. Considering the reception the first one got, there are some high expectations for 'Prey 2.'
Unfortunately, things aren't going well over with the developers, Human Head Studios. Bethesda has announced that the game will be delayed due to quality issues. "The game does not currently meet our quality standards," says a Bethesda rep. "We are determined only to release the AAA game that fans rightfully expect, and are unwilling to compromise our quality standards to meet a release schedule."