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It wasn't all that surprising when Activision started deleting user-made World Tour songs based on copyrighted music. After all, they gave advance warning. However, Sony is now unexpectedly engaging in the same behavior with LittleBigPlanet.
Several user-created levels on the LBP servers have been deleted by moderators because they reference existing intellectual properties. According to Destructoid, levels containing even miniscule references to Metal Gear or Sonic the Hedgehog have been taken down. A forum thread on LittleBigWorkshop.com also mentions that Pac-Man and Scrubs references also led to levels getting beat with the ol' moderation stick. No warning or explanation was given by moderators to users when their levels were removed.
Let's assume that making a LBP level for non-commercial purposes based on a copyrighted work is in fact illegal. If that's true, it really sucks considering LBP's a platformer, a retro genre that's really conducive to nostalgia for old games like Mario or Sonic - but it would've been acceptable. I can see why Media Molecule and Sony would want to cover their asses from any sort of copyright litigation. The real issue is that this policy wasn't revealed to players before the game was launched. Most players jumped into the content creation with the understanding that as long as you kept your custom levels PG, they wouldn't be deleted.
Even worse, the levels the moderators delete are gone for good, flushing your hours of hard work down the drain. You can't just take out the couple of items that violate copyright and re-upload the level. Another thread on LittleBigWorkshop detailed a workaround for this - essentially, you create an offline backup which you can publish if the original is deleted. Hopefully users will only have to resort to this solution in the short-term and Sony will fix its moderation policy. The biggest draw of LittleBigPlanet is the content created by the player community and governing this content with such strict, nebulous rules stifles that community.