A: Because it didn’t kick ass.
A few people have been lamenting Google’s decision, and a few people have been wondering why it happened, since Google didn’t say explicitly. It really is that simple though: if Google continues creating whatever seems like a good idea at the time, and they don’t kill the ones that are mediocre, they’ll end up bloating and dying just like those before them.
Kickassery is somewhat subjective, but Google Answers didn’t provide it. It was one of Google’s first side projects, and it was interesting at the time: pay someone random a few bucks to answer a hard question. However, here on the web, what was interesting in 2001 doesn’t really hold up to Yahoo! Answers took them to town with a free service that provided better answers to boot.
Reportedly, Google’s Answers didn’t even notify you when you question was answered. Wtf? People want an RSS feed, SMS notification, and messenger pigeons for when their question is answered - if it’s urgent enough that you’ll pay for it, you probably need to know it now!