Well, if the mini is indeed dead, I suspect it is because Apple does not WANT to compete in the budget domain. They want home users to buy the iMac, and they want Pro users to be forced into the Mac Pro. That was the evil secret with the mini - with a Core 2 Duo, it was powerful enough that some "Pro" users who didn't need high end graphics could easily get away with a Mini.
I suspect Apple also figures that their brand has enough "exposure" now that they don't need the Mini to bring PC users into the fold. And remember, when the Mini first came out, Apple was PowerPC, so there was no "comfort zone" for current PC users - so the Mini, as a cheap "try it out" option for PC users - was needed. Nowadays, PC users can put Windows on their Mac if they hate OS X, so Apple likely does not see the same need for the Mini as a "crossover" device.
So, in conclusion, I suspect in Apple's mind, the Mini no longer is necessary to bring people to OS X, and serves only a negative purpose - it allows people who would otherwise buy a more expensive machine to spend less money. And we all know that's something Apple can't stand!
As for me personally, I'd still like to see a mid-range tower. I never was a huge Mini fan - it struck me as all the disadvantages of a laptop with none of the advantages. But for those in the budget market, I can see how its loss will be felt. I can also see how business people may be unhappy, as the Mini is the perfect little computer for secretaries and receptionists and anyone else doing standard office tasks.