I voted both options just because you made it possible.
Anyway, it's unclear. The lack of updates would give one the impression that it's dead, but at the same time it's possible the Chaps just have a lot of other projects on their plate. Besides, it seems like the occasional new Homestar content still comes up, albeit much, much more rarely now. I didn't think there would be a new Decemberween toon last year, but there was. Puppet Homestar and Strong Bad have also appeared at concerts for They Might Be Giants and The Aquabats since the update drought started. Oh, and there's this one poker game by this obscure developer you probably haven't heard of that had Strong Bad in it.
It seems more like the lack of updates are because the Chaps aren't able to work on it, as opposed to not being willing. Then again, I could be wrong.