my take on your questions;
it should be more flexible than PDF
-- XPS is a snap shot of a page, but it also a printer driver and a spooler technology - nothing more or less ridgid in that you either follow the spec and it works, or it does not.
What
happened to this format?
-- beside the fact that it does not solve a problem that was not already solved - there is no ecosystem - who cares about something that does the same thing as PDF, is no smaller, is not in any way faster, and not no one in the design community can place it, open it, view it as there is no MAC version, where many newspapaer and magazines live...
Is it just because PDF is the de facto
standard or there are other reasons why people are sticking with it?
-- no, actually, it does nothing better or 'more' - so what would be the upside to switching ?
I
just feel microsoft does not believe in it or stands behind it.
-- not that it would matter if they marketed the crap out of XPS - not sure this is 'no ecosystem' is something even Microsoft's could overcome - they tried to 'replace' PDF and they failed. Now Silverlight, will that be better than Flash ?