Kameo 2 was culled at Rare to make room for more Project Natal development, reports CVG.
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The cull came about as part of a 'company-wide restructure', which saw more than one 'traditional' franchise sequel cancelled. Kameo 2 was one of the games canned. Disappointing sales of the original Kameo is also said to have played part in the decision.
The restructure sees Rare positioned as one of the key players in Project Natal's launch. Rare was also closely involved with Microsoft's Avatars, so it's not the first time the developer has helped Microsoft launch a new feature.