1. Lack of Sponsorship: Remember, Sun is hurting this year. The company recently announced a large quarterly loss and they're having layoffs. Although Sun has disclosed continued plans to certify Ubuntu on its servers, I don't recall Sun being listed among the Ubuntu Live 2008 sponsors. An event like this, while rewarding for attendees, likely doesn't deliver much ROI to Sun since Ubuntu remains in its infancy on the server. Also, companies like Dell continue to offer Ubuntu on the desktop, but Dell has gone on the record stating it has no near-term plans to offer Ubuntu on the server. So, the anticipated "growth" in sponsorship for Ubuntu Live -- from hardware, software and application providers -- may not have materialized.
2. Competitive Events: LinuxWorld, scheduled for August 4-7 in San Francisco, will include an Ubuntu-centric event called Ubucon on August 7. It's positioned as: "Fun, irreverent, but also with content of interest to users, developers and those curious about the Ubuntu phenomenon, an UbuCon is part open space event and part user conference."
Frankly, Ubucon sounds a bit like Ubuntu Live (although I'm not sure if Canonical is involved in Ubuncon). Plus, LinuxWorld has become an increasingly corporate event -- a place where ISVs can talk about business-oriented applications.
Of course, 2008 was supposed to be the year that Canonical and Ubuntu began to gain traction on corporate and small business servers -- so LinuxWorld may be a good, solid setting for more information about Ubuntu.
Regardless, I'm sorry to hear Ubuntu Live 2008 has been canceled. Last year's event was a winner.