Apple may or may not drop iWeb. I think dropping it would be a bad marketing decision. The iLife suite has always been one of the strongest selling points for buying a mac. It is easy to use, has many of the tools of pro media software products, and best of all it's free. You can load photos from your camera, edit them, create music with Garageband, edit videos with iMovie, and then create a simple website with iWeb and publish it all.
If they drop iWeb, what will happen? You will be able to create all this great media content with iLife and then... just sit on it? Not be able to share it? Post it all on Facebook? That just doesn't seem very Apple-like.
I would hope they continue to develop iWeb, either as part of the iLife suite or as a stand alone app. Add some more useful features like rollover creation, templates, and raw code editing. And they could easily add an FTP uploading feature like Freeway or Dreamweaver, allowing you to buy your own hosting space and upload and sync with that. If they separate it from the iLife suite, they could sell it on the App Store for around $100-$200, depending on what it becomes. I for one would buy it. I use iWeb, Freeway, and Dreamweaver to create sites for clients. If all they want is something simple, 5 or 10 pages, audio, video, a few downloadable files, i will use iWeb every time. I can work very fast and charge them a lower price. I don't invoke the Big Boys unless the site demands it. A more capable version, somewhere between the current iWeb and Dreamweaver, keeping all the well-thought out convienience and ease of use features (like the blue alignment guides that pop up automatically when you're stacking a bunch of pictures) would be a huge seller.
And yes, I've tries Sandvox, Rapidweaver, etc., and none of them have the raw ease-of-use simplicity of iWeb. Plus, you can hot-rod it to do some of the more advanced things if you have the skills.
If Apple drops it, then they are litterally dropping the ball.