...well, not dead, just renamed.  Here's the new naming for "the technology formerly known as Atlas" (from ScottGu via Brian Goldfarb):

1) The client-side “Atlas” javascript library is going to be called the Microsoft AJAX Library.  This will work with any browser, and also support any backend web server (read these blog posts by Shanku Niyogi and Brad Abrams to see how to run it on PHP and ColdFusion).
 

2) The server-side “Atlas” functionality that integrates with ASP.NET will be called the ASP.NET 2.0 AJAX Extensions.  As part of this change the tag prefix for the “Atlas” controls will change from <atlas:>to <asp:>.  These controls will also be built into ASP.NET "Orcas"


3) The “Atlas” Control Toolkit today is a set of free, shared source controls and components that help you get the most value from the ASP.NET AJAX Extensions.  Going forward, the name of the project will change to be the ASP.NET AJAX Control Toolkit.

I like that they plan to RTM Atlas v1.0 this year and that it will be included with the next release of ASP.NET.  I'm looking forward to seeing the final bits.