I'm not sure the exact reason, but I've read on some emu pages that emux shut down because of nintendo, word is they were sued and forced to close.
Although I never heard if this was the exact reason for the closeure I certainly wouldn't doubt it, anyone remember nintendo's argument that renting a game or buying them used was piracy, and they sued blockbuster??
now THAT was absurd! no wonder I have always been a sega loyalist