Yes, that is true, by the end of 2009 I think. You can now do in Visualforce everything that you could have done in an Scontrol, and faster and more securely to boot.

Q1: Does your answer that “S-controls will be phased out” mean that existing, older instances of SalesForce will be forced to REPLACE existing S-controls that provide useful functionality? In other words, will these STOP functioning?
A: No, existing S-controls will continue to function

Q2: will the inability to use S-controls be limited to NEW instances of SalesForce?
A: I believe the inability to create new S-controls will apply to all instances.

Q3: If the answer to question 1 is that existing S-controls will CONTINUE to function, then will revisions of those S-controls be prohibited?
A: I’m not sure, but I think the answer is no — you can modify old S-controls but can’t create new ones