W3C is going to try and keep both of them alive (discussion here). The reason is that move from HTML to XHTML, SGML to XML is not just a syntactical shift, but a paradigm shift. And it has not be adopted very easily. W3C will so setup a new group that will incrementally better HTML.
Some things are clearer with hindsight of several years. It is necessary to evolve incrementally. The attempt to get the world to switch to XML, including quotes around attribute values and slashes in empty tags and namespaces all at once didn’t work. The large HTML-generating public did not move, largely because the browsers didn’t complain. Some large communities did shift and are enjoying the fruits of well-formed systems, but not all. It is important to maintain HTML incrementally, as well as continuing a transition to well-formed world, and developing more power in that world.
There will be another group to work on forms. The attempt will be to create a HTML forms language which will be a subset of XForms and a superset of HTML language.
The biggest deviation though is that HTML and XHTML will live together without depending on each other. XHTML was considered a successor of HTML, however, now both of them are going to exist as distant siblings.
The proposal has got a mixed reaction, but the one of skepticism is more prevalent. I think the situation is still confusing. Even XHTML acceptance has not been complete. Majority of the templates are still XHTML Transitional compliant, without any plan of upgrading to XHTML Strict. Neither do all the browsers support the application/xhtml+xml content type suggested for XHTML documents.
There are chances of creating two parallel streams of technologies, experts, technologists and standards, which can be a danger to Web as a whole. Somewhere there will have to a convergence so that standards hold their significance.
Whatever it turns out, whether we use HTML or XHTML it is important to retain the benefits of separation of data and style. It is important to retain the benefit of automation using which we can develop programs to parse through the documents.