We were originally told the game would have multi-player, but not what form it would take. At the time they were planning to have multi-player, but as Lar explained, they had to put it on hold in order to create a good single player game (story, quest depth, etc). He said on hold, rather than drop, so there may be some possibility of it being added later (perhaps an expansion pack, or something).
Maybe when they are finished with D2:ED, they can use the same engine, etc, and knock off a quick action-RPG (where there are no quest or story concerns to get in the way of multi-player support). As long as they don't waste too much time on that before getting started on DD3.
