Steve is famous for telling his employees that Apple has to focus on what they do best. First Java and now the XServe. Apple must be taking inventory.
The price of a similar loaded Mac Pro is close to the price of an Xserve, so the only real advantage are the rack mount, lights-out admin and dual power supply. That might not be enough to keep sales going at the high end, having the low-end eaten by Mac Mini Servers.