dissolved actually.
clover studios wil be shut down in march in an effort to consolidate resources for the big haul in next gen game development. clover's games, despite being critically acclaimed, just dont sell very well. now their games can join the ranks of beyond good and evil, ico, physchonauts, grim fandango...
this is saddening, where is Madden Roster Update 2008 when you need it?
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*=May be related to the Resident Evil 4 debacle where he said if it's not exclusive he'll decapitate himself and the company decided to make it multiplatform right over his head.
EDIT: Looks they might jump Capcom's ship after all:
http://www.kotaku.com/gaming/clover/rumor-clover-to-break-from-capcom-207177.php
clover is an off-shoot of capcom, entirely funded BY capcom. They are just being brought back into the fold, nothing to worry about - the talent are still there.
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Not necessarily, at least some of their employees (like the aforementioned Shinji Mikami) joined Clover to distance themselves a bit from the main company. They won't go back to Capcom.
EDIT: And I hope Okami will still get released in Europe nonetheless.
So most of Clover was already gone.
This bodes well for possibility of Inaba, Mikami, and Kamiya forming a new studio.