From Liveside:
http://www.liveside.net/main/archive/2009/04/18/spaces-team-shuts-down-their-blog-eh-what.aspx
In the words of Liveside: "this is one team at Microsoft who don’t seem to know how to eat their own dogfood."
I mean really, if the team that makes it aren't using it, perhaps (just maybe) that's why it's such a pain the *ss for those of use that actually blog with it. 
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GoddersUK
My five year mission: To boldly split infinitives that no Niner has split before!
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Um..they didn't stop using Spaces..they're just consolidating all the Live blogs.
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