Among the numerous reasons are the fact that they made some faulty assumptions concerning player balance and play style, based on the way their beta testers stressed the game more people showed up for the beta than stuck around after the official launch. Williams goes on to say " ... we have systems that require a minimum number of players to function correctly, such as our economy, and they break other systems if they're not working correctly (such as PvP). If we didn't have these kinds of interdependent systems, we wouldn't even be considering server merges."
For the full list of reasons for the shutdown, read the entire article. What do you think, Learned Audience? Was this the right decision to make, based on the evidence?