I can't see them killing it, it just wouldn't make sense. While Apple doesn't seek out the lower priced market, I'm sure they understand the importance of offering something in the category.
PC switchers like it because they can continue to use their existing monitor. It's also become very popular as a media center.
Besides that, it's a good computer. It gets a lot of flack for it's specs, but I use one hooked up to two 22" 1080p monitors as both a workstation and media server for the house and my MBP. It's been a workhorse, and doesn't complain, ever.
Low specs or not, it's competition is the $400 PC at Wal-Mart or Best Buy. If someone has thought about switching, but has budget issues this is the Mac for them. It's also a good way to get people into an Apple store in order to upsell them into something else. There is a lot of value in the Mac Mini for Apple.
Apple can also turn quite a profit from the Mini. I have a hard time believing that an $1199 iMac which includes all the tech-guts, bigger HDD's, more RAM, high end monitor, keyboard and trackpad/mouse turns out a higher margin than the mini at $699. Consider as well that most people will buy an Apple keyboard and mouse which brings it to around $800.
Apple might at some point to a total redesign or rebranding of the Mini, but they would be stupid to discontinue it.