Kind of amazing to see that the Pre has only been out for 10 months and Palm is already closing up shop.
They're not closing up shop and the WebOs will be around. The problem was that they delayed the next generation OS, so long that people stopped buying treos in favor of iPhones/BlackBerrys. Their income stream all but dried up, and they banked on the promise of large sales to sustain them as they started rolling out new phones with the new OS.
The problem is that the initial phones felt cheap, were of extremely poor quality - I've been reading that most palm users had to send in the phone at least once and failed to deliver an SDK/App store in a timely manner. That being the case, they didn't sell as many as they needed to keep going and basically ran out of cash.
The design of the OS appears solid enough, but with the money problems and now up for sale, I'm sure development on the platform is going to grind to a halt and even internally.