Working for a game company myself and involved in helping create these games from the alpha stage to the final release, what makes up the 'development cycle' differs from company to company and game to game.
Development cycles are usually shorter for single-player/multi-player games (i.e. MOH, BF1942, UT2003, etc...) than it is for MMOGs like Everquest, WW2OL, UO, etc.
Development cycles for these types of games usually continue through out its entire life cycle. Most of the time, if a MMOG gets a new graphics engine or other substantial change, it will be considered just part of the original development cycle and not a new one for a new game. Of course, some companies make the exception when they feel that the changes they are making will change the game drastically enough that it won't be seen as the same game but an entirely new game instead, as the case with AH2. Some others see sequels as just part of the original development cycle, like SOE does with Everquest and their other online games.
And the costs? Usually that depends on the companies themselves. Some are willing to spend enough money to keep the game viable for years while others are just content enough to release patches once in awhile to fix some problems that crop up after the release date and then stop supporting it after a few months.
As for iEN's problem, that has less to do with their 'development cycle' than it a lack of a project manager/game designer that has weak managerial skills. You can tell when the project manager/ game designer is over his/her head when you pointed out one of the problems with WB, one hand doesn't know what the other one is doing.
Ack-Ack
