And, yup, as soon as the rumour started, it's been debunked.

ConnectedConsoles prompted Sony for comment on the situation, getting the following response: “As demonstrated recently at GDC, LittleBigPlanet has been shown as an example of how an existing game could benefit from PlayStation Move Motion Controller support. This is not a confirmation of LittleBigPlanet 2, and we do not have any announcements to make about the LittleBigPlanet franchise.”

So that's the end of that then. At least, for now. We imagine Media Molecule might make a sly announcement at E3.