Nintendo World Report published their full interview with Masuda and Hironobu Yoshida today. Aside from various X and Y stuff, lo and behold, they got him to open up about the Azure Flute:
We can now die in peace.
Nintendo World Report said:NWR: How come the Azure Flute was never made available in Diamond/Pearl/Platinum?
JM: When we were first developing the games we thought about including it. I thought it would be fun. But once the game was complete and released, I changed my mind down the road and didn’t think it would be – I thought it would be confusing for people and kind of hard to understand how it worked. So I eventually made the decision not to distribute it.
We can now die in peace.