Even before the Japanese release, they were making a port of the game over to the Vita and I had a feeling this would screw up the Western release.

Technically it doesn't make sense to not release it on the PSP because it has a pretty big player base so if they are waiting for the game to get demanded in the West then SE only has themselves to blame by waiting for the Vita and not bothering to really promote the game in the West. Tons of articles and previews for FFXIII and it's sequels but not much of a peep for Type-0 since it's announcement back in 2006.

If they haven't released it by now, I feel a PSP release is pretty much not happening because god knows Sony itself has pretty much stopped giving a damn for the handheld either while they set their sights on the Vita.