It’s true. Media Molecule boss David Smith just confirmed it in a just-ended live interview with Eurogamer.
“I can confirm that we’ve licensed music by The Go! Team and Battles as featured in some of our trailers,” said Smith. “The game has lots of other awesome licensed music which is not just a feature of LittleBigPlanet’s Story mode, but is available to you to use in create mode (assuming you have collected a given track’s music object).
“Even more exciting is the interactive music system which allows you to musically score your levels as you see fit by placing down interactive music objects at key points in your level where you want the music to change.”
Head through the link to read the full thing.