Katherine Heigl has dropped out of contract talks with Grey's Anatomy, due to matters of dollars and cents,

People reported Wednesday morning. "Katie is disappointed and hurt that Touchstone doesn't value her as much as her other costars, especially Sandra Oh and Isaiah Washington," said a source who apparently didn't get the memo that Touchstone changed its name to ABC Television Studio about two weeks ago. Heigl, if you think way, way back to the pre-Anna Nicole/Bald Britney era, was perhaps the most vocal of T.R. Knight's cast mates in publicly expressing disapproval with Washington's gay slur. UPDATE: ABC Television Studio (né Touchstone, Mr./Ms. People "Source") has since issued the following statement to TVGuide.com: "Katherine is an integral part of Grey's Anatomy and its success. Fortunately, we have a long-term contract to ensure she'll be with the show for several years to come. In recognition of her tremendous talent and value to the show, we recently approached Katherine with an offer to raise her compensation significantly above the terms of her current contract. We were surprised to see this gesture reported negatively in the press, and want to reassure fans that she will continue as Izzie Stevens." Translation: Heigl's contract was not up by any means, but ABC Television proactively offered the cast pay bumps, and she felt hers wasn't on par with her peers'.