I seriously doubt Legendary would spend the money on a legendary(get it!) character, and then let the project wither. Granted Toho was probably very reasonable dealing with Legendary regarding the price, probably more reasonable than if they had been negeotiating with a smaller company, we have every reason to believe they are on course for the production of Godzilla.
In the meantime however, they have quite a few other projects to take care of first, like DKR, Man of Steel, 7th Son, Jack the Giant Killer, Pacific Rim, The Hangover 3, and a sequel to 300. These are all serious projects that Legendary has to take care of before we can worry about progress reports for Godzilla. Legendary has it's plate full for the next few years, the big guy is on the way.
I say we might be in trouble if we have no serious progress news by mid-2013.
Rest assured, when the first trailer for Godzilla is released, it'll be epic beyond belief.