The website still doesn't mention anything about the phase out, but it seems likely it'll be pulled soon. the $2999 price tag still seems a bit steep to me, but it's probably better than than the initial $4500 price tag, and better than the price that would probably be asked for any versions that might appear on various auction sites once Dell officially discontinues it.
We don't know for sure if the Laptop sold well, since Dell doesn't release sales information, but according to the article, the main object of this phase-out is to bolster the flagging Alienware line, which has lost much of it's luster since being purchased by Dell. Whatever the reason, the laptop is going bye-bye, so if you want it, go and get it. But you better hurry, because it may not last.
Gallery: Dell WoW XPS Review Gallery
Gallery: Dell XPS M1730
[Thanks for the tip, Surely!]