Google are axing Wave due to insufficient usage - from the blog
But despite these wins, and numerous loyal fans, Wave has not seen the user adoption we would have liked. We don’t plan to continue developing Wave as a standalone product, but we will maintain the site at least through the end of the year and extend the technology for use in other Google projects. The central parts of the code, as well as the protocols that have driven many of Wave’s innovations, like drag-and-drop and character-by-character live typing, are already available as open source, so customers and partners can continue the innovation we began. In addition, we will work on tools so that users can easily “liberate” their content from Wave.
Doesn't really surprise me, I don't think the Internet was ready for something like that, though I can sort of see what they were trying to do.
I never used it beyond an initial poke because I never felt it offered me anything I didn't really have already, though I know a few people here were using it occasionally?