This is actually quite surprising if true. Niagara performs quite well for its size, and Rock is supposed to fix some of its major shortcomings. Furthermore, Sun has put quite a few new innovations into Rock, including the so-called hardware scout and support for transactional memory. When it's announced that Oracle will buy Sun, many thought it would be for Rock.
If Rock is actually cancelled, then the current best SPARC processor would be from Fujitsu, the SPARC64V line. However, it's said that Fujitsu is also considering leaving this market... if so, then this could be the end for the entire SPARC line.
Of course, it's also possible that Sun is going to make a more traditional improve on Niagara rather than the more radical Rock.