It appears that Google has found itself in a bit of Slack Water, the time when the sea becomes still just before or after a tide, as they announced on August 4, 2010 that Google Wave was coming to an end. Google will continue to support the application for end users through the end of this year and they plan to support the API for developers long term hoping that some parts of the project will live on in other applications.
More detailed information can be found at the Official Google Blog: http://googleblog.blogspot.com/2010/08/update-on-google-wave.html.