In one of the oddest developments ever in the history of Hollywood, one of the first things John Lasseter did when the Disney/Pixar deal became real was cancel ‘Toy Story 3″ because the idea for the movie was creatively bankrupt.

One immediate sign of Lasseter’s influence is that plans for Disney to make the long rumored sequel “Toy Story 3″ on its own have been scrapped. If the film is made, it will be done by Lasseter and the other creators of the original film, the companies said.

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An even more informative quote from Animation NAtion

As the subject line read, John Lasseter and Ed Catmill announced to Feature Animation employees today that the “Toy Story 3″ production will end effectively today. They said that sequels should only be made if there is a really great story that demands it, and should be the domain of those who created the original film.

In other words, if Pixar wants to make a sequel to its films, it will. If Disney Feature wants to make a sequel to its film, it will. But the two will not cross.

They said they were interested in the talent assembled for Circle 7, and would try to accomodate that talent–they were sort of vague. But they said they held no prejudice at all towards those who were at Circle 7, and wanted to find a way to use their talents.

Hope this works out for the best for all the talented folks at Circle 7.

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