The Inquirer heard NVIDIA decided to cancel the GeForce 7800 Ultra because it would hurt the GeForce 7800 GTX sales. It looks like NVIDIA believes the rumours that ATI can't ship enough R520 XTs that run at 600/1400MHz so there isn't really a need for them to ship out a faster G70 card.
Business wise it's better to ship many GTX and GTs and sell them in quantities than to release a limited but faster Ultra. We learned that Nvidia shipped a few tens of thousands of GTX and GTs already and it has been shipping in numbers ever since. Last thing you want is to upset people with releasing Ultra, a card that would be marginally faster than G70 and likely to create more problems than solve them.
In that light a very limited but available R520XT might be a Yule winner and best performer and Geforce 7800 GTX is here to stay. At some point Nvidia has to update it to a 512MB memory version but that’s about it. The key problem for ATI is that it cannot ship a few tens of thousands of those units until December, no chance at all, and Nvidia can reach and beat those volumes with its highly available GTX part.