Long time Tekken director Kaysushiro Harada told press at Namco Bandai's Level Up event in Dubai that full production on Tekken X Street Fighter has yet to commence. Currently they are fully focused on partnering with Capcom for the 2D fighter Street Fighter X Tekken.
"We haven't really started on Tekken X Street Fighter yet. But things are shaping up nicely with Street Fighter X Tekken, and we will have more to show you of the game at E3. We hope you will enjoy it."
Given that Namco Bandai also announced Soul Calibur V for release in 2012 at the Level Up event in Dubai, it makes sense not to crowd the market with too many fighting games.