According to the site, the PlayStation Phone shown in the photos it ran is "most definitely real" because the site "knows it to be true".
"This is a device which has been confirmed through multiple, trusted sources,' reads a post on Engadget. "And we're not just talking good tipsters -- some of our information comes from people much more closely connected to the project. Even since last night we've received more info about the phone -- learning that its codename is 'Zeus', and it was last seen running Android 2.X (not 3.0, which we suspect will be the shipping version).
"It should be obvious by comparison of our original mockup to the real photos we've just uncovered that the handset we described in August is the same handset now fully revealed. Prior to last night, we had never seen an actual image of the phone. It should also be obvious that the device pictured in those photos is a prototype running early software (which would explain the A / B button mention in the photo above) with hardware that was likely hand-built, or at the very least created in a very small batch."
The site goes on to say the "alleged Sony response to the device" clearly reveals "whomever was originally questioned either didn't know of the device's existence, was lying about its existence, or simply had their response taken out of context".
Engadget also brings to attention it was one of the first sites to bring to the world pictures of the iPad, Nexus One, the Dell Venue Pro, MacBook Air, and the iPhone 4.
So, it basically boils down to this: if you are in the market for an Android phone, hold off until Sony finally either confirms or denies this properly.