According to this story over at WarCry, this is indeed the case. Perpetual, now known as P2 Entertainment, appears to have handed the project over to another developer. WarCry says that this news has been verified by a number of sources. Sadly, there's no info yet as to who exactly has taken on the project, and the reasons as to why P2 has decided to drop it.

In days gone by, I was a pretty hardcore Star Trek geek. I even had my picture Photoshopped into the Original Series deck with Kirk, Spock and the rest of the crew when I was around 15. So the idea of a Star Trek MMO has always interested me. Unfortunately, when you hear this kind of news, it makes it hard to see a happy, successful future for the game.

P2 Out As Star Trek Online Developer [WarCry]

TenTonHammer broke, and Shack News dug deeper into, recent news that public relations firm Kohnke Communications is suing Star Trek Online developer Perpetual Entertainment over a falling out two had over now moth-balled MMO Gods & Heroes: Rome Rising.

The seven count suit alleges breach of contract and fraud, among other things, and seeks up to $US 290,675 stemming from Perpetual's recent shift in ownership and decision to redirect their efforts from Gods to Star Trek.

More importantly, though, the suit offers a disturbing look at both the world of game development and the relationship between PR firms and game reviewers, or at least the relationship that Kohnke thinks exists.
The suit lays out the fact that $US 70,000 of Kohnke's compensation was held back with the understanding they would receive that money, and as much as $US 280,000, based on the number of active subscribers to the game 90 days after shipment.

The incentive came to the PR firm if they were successful in creating pre-release "buzz" and in "convincing reviewers to write positive reviews about the game".

Funny, and I always thought it was the game that was supposed to do that.

I'm not naive enough to think that the success of a video game has nothing to do with the PR push, but it's disheartening to see that in this industry, reviews are see as something bought, not earned.

Star Trek Online Dev. Perpetual Sued by PR Firm, Charged with Breach of Contract, Fraud (Updated) [Shack News]

The official Star Trek Online forums were host to a visual treat for fans yesterday, as Perpetual Entertainment's Mike Stemmle presented the first real screenshot of the MMO. The story lead explained, in detail, STO's Interaction System which "controls every non-combat, player-to-NPC interaction in the game." Whether you're negotiating with alien species, beaming from ship to shore or responding to distress calls, the Interaction System is where you'll be pointing and clicking your mouse. That rather mundane stuff is hard to read when one's picking about the minutiae of a screencap featuring an alien ambassador of (personally) unknown origin. Sure, it may look more Voyager than TOS, but that doesn't mean we won't have fun going where no MMO player has gone before.

An even bigger, better pic awaits you at the official forums.

STO DevLog 5.0 - "Interactions in Action" [Star Trek Online via Shacknews]