Stanza was one of the first apps I downloaded when I got an iPhone. It pre-dated Amazon's release of the Kindle iOS app and Apple's own iBooks app, so for awhile Stanza was the best option out there for reading eBooks on an iPhone.
Not long after it released the official Kindle app, Amazon bought Stanza. What's happened subsequently should come as no surprise; the app languished, going for as much as nine months between updates. Stanza has recently been updated for iOS 5 compatibility, but according to Macworld, Amazon has confirmed this will be Stanza's final update.
This will be sad news for a subset of iOS users, because Stanza has always had support for a wider array of document formats and more customization options than either the Kindle app or iBooks. Amazon's official word on the matter tries to steer Stanza users toward the Kindle app instead, but not all users will find that a suitable substitute for the flexibility Stanza provided.
Personally I haven't used Stanza for some time; the iBookstore has vastly improved the breadth of its offerings over time, and I've found iBooks suitable for the majority of my e-reading needs. Stanza was the first e-reader app I used on my iPhone, though, so it's a bit sad to see it going away.