I'm guessing that the Mac Mini Server ate a lot of the Xserve sales because the Mac Mini Server is way cheaper and is sufficient powerful for most workgroups, when you add a couple of external disks.

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.