It doesn't mean the project is failing. Kubuntu had only a single developer from Canonical, and numerous other developers. This just means that Canonical doesn't feel like funding a KDE desktop anymore with that one developer. It doesn't mean the project is ending or anything.
You're right, but it means the project will (probably) become less stable. One less full time individual probably means less testing and might require you to use older packages or build them yourself.
