From the Mozilla Development Roadmap:
1. Focus development efforts on the new standalone applications: the browser currently code-named Firefox, the Mozilla Thunderbird mail/news application, and standalone composer and other apps based on the the new XUL toolkit used by Firefox and Thunderbird. We aim to make Firefox and Thunderbird our premier products, and encourage extension authors and other ISVs to target these applications for their work as well.
2. Continue to perform sustaining maintenance, including security updates, on the SeaMonkey application suite's final stable branch (1.7.x) for enterprises and other organizations with large existing Mozilla deployments.
From the Wikipedia "History of Firefox" article:
Although the Mozilla Foundation had intended to make the Mozilla Suite obsolete and to replace it with Firefox, the Foundation continues to maintain the suite because it has many corporate users, as well as being bundled with other software. In an attempt to combat software bloat, the Mozilla Suite developers stripped out several features and much of the interface. Further, many Mozilla Suite features (such as the IRC client) are now available as optional Firefox extensions.
Finally, the Mozilla Foundation is not a corporate entity. That'd be the Mozilla Corporation. In addition, the Mozilla Corporation was not created to replace the Mozilla Foundation (or the Mozilla Project), it was created to handle the distribution and marketing for the Foundation's products as well as properly handling all revenue-generating aspects of the Foundation. It is a wholly-owned subsidiary of the Mozilla Foundation, NOT a fucking replacement.