Had not heard that, but this is truely heartbreaking. I still think that Smalltalk is the better language than most of the modern object oriented languages, and be it only that is is a bit more pure and its "successors" are too much a mix with other paradigms. Just thinking of Python - it is in a wide range of features equivalent to Smalltalk withtout being as consequent in the object orientation.
One could only dream of how nice the programming world would be, if Sun had pushed Smalltalk instead of Java. Ironically, Hotspot started its life as a Smalltalk VM and only when Sun took over the development was turned into a Java VM.
Actually, Sun tried to license Smalltalk from Parcplace to use in embedded devices. At that time Parcplace was quite happy to charge $3000 per seat and didn't make a reasonable offer to Sun, so the Oak (now Java) project was started instead.
To make things even worse, Parcplace merged with their main rival, Digitalk, which offered Smalltalks for PCs and Macs for $100 to $500. They promptly replaced those with "enterprise" products costing way more making it impossible for new people to learn the language except with toy implementations like Little Smalltalk and GNU Smalltalk (which later evolved into a very decent implementation). For some reason the nice Smalltalk/X (commercial, but free for educational use) only had a small niche in Europe.
Note that Sun already had a Smalltalk in the form of Self, but Java was created anyway and Sun decided to use it exclusively killing Self and Tcl (which spun off instead of dieing). Part of the Self group merged with a group researching Smalltalk with optional type declarations (Dart is the latest version of that) to create the company Animorphics to develop StrongTalk.
Meanwhile, the Pep project at Sun demonstrated that you could run Java on the Self VM and greatly outperform all existing Java implementations (which were simple bytecode interpreters). The Animorphics team did the same and showed off Java on their VM, which caused Sun to buy them to make this demo into the HotSpot VM.
One could only dream of how nice the programming world would be, if Sun had pushed Smalltalk instead of Java. Ironically, Hotspot started its life as a Smalltalk VM and only when Sun took over the development was turned into a Java VM.