For the record before everyone freaks out,
Only the version (SA-MP 0.3.8) will be discontinued. The most-anticipated 0.3.8 feature, model customizations, will still be released as an update within the 0.3.7 branch (SA-MP 0.3.7-DL), which players will have to download and install if they want to play on 0.3.7-DL servers. Only features related to model customization and texture downloading will be implemented on the 0.3.7-DL update.
The rest of the development progress of 0.3.8 will still be carried over to future updates within the 0.3.7 branch, merely skipping Version 0.3.8 because... Kalcor's versioning algorithm.
It has definitely caused a lot of confusion, but Kalcor used the wrong term ("cancelled") which is why everyone is freaking out. The reality is that the project is just delayed, but the numerical version (0.3.8) is no longer going to be used.