While I am definitely bummed, I don't want to totally dismiss what the editor is saying out of hand. I'm sure that he's putting a happy spin on whatever's going on, but it is possible for too much success to hurt a publisher. If demand for a magazine outstrips their capability to supply it, they have to either spend a lot more money to get their supply up on short notice or admit that they're sold out and some people who want their stuff can't get it -- both of which hurt the magazine.
I also know that it's been really tough to find Amazing on magazine racks, and that almost all the sales of the magazine have come from people signing up with subscriptions. This'd seem wonderful, but if I'm remembering a talk at WorldCon correctly, most magazine publishers would rather that people buy a magazine every month off the rack instead of signing up for a subscription, because they make more money off the rack. If they have a special introductory deal (which they did, I think) on their subscriptions, and a lot of people signed up, and that's the only money coming in because they had trouble getting on magazine racks, then it's possible that the success of having a ton of people sign up for subscriptions ended up making Paizo take a loss.
Sorry if I'm not saying that well. I know just enough economics to know that I don't understand economics, but that was what I heard at the convention from a bunch of magazine publishers -- "We ended up going out of business because so many people who bought us off the rack subscribed... and stopped buying us off the rack." That may have something to do with it.
Or, possibly, Tacky's mystic curse strikes again, and publishing my fiction has caused the magazine to fold... :\