Support-wise, Apple will obviously fulfil all its duties. "Apple will continue to take orders for current Xserve models through January 31, 2011," Apple writes, "These systems will have Apple's full standard one-year warranty. The AppleCare Premium Service and Support program for Xserve is available as an option at time of order to extend complimentary technical support and hardware service coverage to three years from the Xserve date of purchase."
There will be no replacement for the Xserve; instead, Apple advises interested customers to buy Snow Leopard-equipped Mac Minis or Mac Pros. I think that when Lion arrives, there will be no more separate server release - it'll be a single release, so you can just buy any device you want and turn it into a server.
Did the Xserve ever sell well? I've only ever encountered Xserves once - my local Mac dealership, which has a nation-wide network of stores these days (they started with just one) runs everything on Xserves, but that's hardly surprising. Anyone else ever encountered these things in the wild?