Are the people at empeg upset about rio's decision here?

They are disappointed that their flagship product didn't do particularly well in the marketplace. But they support Sonic|blue's current strategy, which is to get this technology to the public via OEMs instead of direct-marketing. (That's industry-speak for "factory stereo system", by the way.)

We've hashed through this dozens of times on the BBS already. Some believe that the expense was the barrier to a large consumer market. This would seem to be true, as hardly anyone bought the players at $1000.00, but they're getting snatched up quickly at under $400.00. Too bad they couldn't be made profitable at that price point. Others think that even the price barrier could have been overcome with the proper marketing.

Or do they have new exciting things in the works for the product?

They have new and exciting things in the works, but not for this product line. There will no longer be a retail car audio line marketed by SonicBlue. An example of new and exciting things they're working on would be the Rio HSX-109.