Jimmy Wales has a post on his blog where he explains that due to the current economic climate and the need for profitability, Wikia Search is ending. Although, Jimmy hints that he would like to resurrect the project during better economic conditions.
Wikia search was ambitious. It acquired the Grub crawling engine and attempted to build an open and transparent search platform on Nutch.
It's an interesting coincidence that Nutch just released version 1.0 after almost 2 years without a release. I'm glad to see the project isn't dead, I had almost written it off.