What is the current state of development for the FLAC codec?

I think the FLAC project filled a very narrow nitch and support for the project has crested and has largely receded now. Codecs like AAC and OGG Vorbis can provide extremely good sound quality (to the point where 99%+ of people couldn't tell the difference) and at a lower bitrate. Most people I know who are using FLAC are using it for archival or mastering purposes only.

I believe flac is still in widespread use, and 7digital does still sell flac albums (for example some albums by Enya, Radiohead, Massive Attack, and Oasis). It seems to me that the RIAA and record labels do not support lossless DRM-free content though (in any format), so finding lossless music to buy online is challenging (or impossible) right now. I partially disagree with Chris above because disk space and bandwidth are growing so quickly we can just use the archival version for our whole music collection. But yeah, unless you have good audio equipment at over 300 bits per second you're generally not going to hear a difference (although I've noticed it in the attack or sound onset of violins).

The FLAC sourceforge project has made its last release for Windows in 2007-09-17.
The darwin release dates from 2009-04-09.

My conclusion is that FLAC development has stopped in beginning 2007, with ports being the only activity since. Although it's still in use, no new evolution is to be expected.

You may have a look at the FLAC-News section of the FLAC site. The latest news dates from 10-Dec-2008 of Paul McCartney's side project The Fireman releasing its new album Electric Arguments as a digital download, and available in FLAC.

So the FLAC codec is still in use, and will stay supported by current players for many years yet. But its use will die out with time.

[EDIT] The FLAC project has been resuscitated in 2017 and may be retrieved from my above links. The current version is now 1.3.2.