Although no reason was given for the shutdown, most agree it is because the site operated under the DMCA safe-harbor provision which meant any copyrighted material is only taken down after a takedown notice is sent out. That rule had the potential to strain relationships with movie studio and the record labels as many users upload clips and custom ringtones.
Nokia did say portions of the site will move onto the upcoming Ovi Store, but all user content will be deleted when the site shuts down.