Lead Designer Jay Wilson wrote a dev diary in which he explained the concept of PvP in Diablo III and why Team Deathmatch wasn't working. He said that arena combat put too much of a focus on class balance that the team doesn't want, that there wasn't enough incentive to fight more than a couple matches, and that feedback from players was mixed.
You still waiting for the good news? Here you go: Wilson said that the team is implementing dueling in the new year and has started work on a completely new form of PvP for the game. This new mode will focus more on objectives and "possibly even integrate PvE elements and rewards."