People who have used TrueCrypt over the years are baffled by the sudden stop in development and claims of insecurity. No known security holes exist, but the folks behind the initiative feel since the project won't be updated anymore, it's better find an alternative. At this point, if a bug is found, it's safe to assume it will not be patched -- no matter how serious it is.
All of this went down in the midst of an independent audit to ferret out potential vulnerabilities in TrueCrypt. The good news is that the audit will continue unabated. And, if legal issues with the license can be sorted, a new team will take over development instead of creating a "fork," or a separate project based on the same core code. Unfortunately, the current license that TrueCrypt is distributed under forbids the creation of a commercially available fork. Matthew Green, a cryptography professor from Johns Hopkins University, is leading the effort to restart development on TrueCrypt. He doesn't want to commit to the creation of a new version just yet, though work should continue once (and if) the licensing issues are resolved.
If you're currently using TrueCrypt, you probably shouldn't panic. We're not exactly security experts, but its' probably safe to continue using it until some security issues are found. Though, you should probably start looking for a backup plan.