It does make business sense to drop financial support for Kubuntu when you think about it. Ubuntu has been around for 7 years and Canonical still has yet to make a profit, so the purse strings undoubtedly have to be tightened so that the focus of attention can be put towards things that are more likely to succeed. It's not like they took Kubuntu seriously anyway - it was generally one of the least polished KDE distros available (though it has been getting better).
Having said that I think Ubuntu is mostly doomed anyway - even with this new tablet/TV angle Shuttleworth wants to get into, the fact he hasn't managed to expand Ubuntu's marketshare via OEMs preinstalling it on machines (with some rare exceptions) kinda tells me he is either really optimistic or really stupid. Red Hat gave up on the desktop and, but then again Red Hat never had Unity and disappearing global menus. Yeah, I'm sure that's what's gonna fix things to make Linux more appealing for mainstream users.