As stated in the official Google blog Google will discontinue Wave development(at least as an independent product). I looks like low user interest is the main reason for this decision.
We have to admin that Wave creates a new point of view on the web technologies and it is little sad that this "new wave" meet its end so quickly but I doubt that Google will completely forgot Wave. I am pretty sure that we will see many of the Wave features in the upcomming Google social network(Google Me).
Also the main parts of the code are availabe as open source so I think that there will be a lot of developers who will continue to use and improve Wave features.
...will google finaly place itself on the top of social networks?
Have you ever heard of Orkut?
Most of the people will say "No". This was the first try of Google to take place in the world of the social networks. Ok, maybe not the first. I have to admit the the first was in the late 2003rd when Google offered to purchase Friendster, but their offer was declined. So they decided to start own project and in 2004th Orkut was launched with the hope that it will dethrone Facebook from the leading position. Although the big interest in the start it didn`t succeed to take the first place(by registered users) and is now on number 7 with 100 milion users. Some people blame Brazilians for overwhelming it and repulsing other members by using not English but Portuguese in social discussions. Since then Orkut is widely used in Brazil and India but not popular in the other countries.
So this was big failure number one(if you can call failure 100 milion users.)
This was the second attempt, this time the "attack" was pointed in the area of short messages. Again it couldn`t reach the size of its main competitor Twitter.
Digg founder Kevin Rose, posted on Twitter the rumour that Google are going to intriduce a Facebook competitor. SF weekly posted an article that this is true and Google have already allocated many engineers to this project.
The only thing left to us is to wait and see will Google finaly succeed to take the throne of social networks king.