I don't know the whole story, but apparently both Chessbase (the host) and the sponsor (in UAE) lost interest.  One could cynically speculate that Freestyle was supposed to be a showcase for GMs, but it didn't turn out that way.  Also, there were too many loopholes in the rules that various players took advantage of (or tried to take advantage of).  It's not that anybody cheated; it is that the rules weren't tight enough, and even with tight rules, certain provisions would have been unenforceable.  Finally there was the vast gulf between the elite players with monster hardware and non-public software and the lower half of the entrant list.  It became increasingly obvious that serious competition for Freestyle prizes required multiple interdisciplinary skills combined with considerable hardware resources and a certain ruthless cunning.

Nowadays it is kind of moot.  Nobody fancies taking on the Rybka Cluster.

So nobody knows of any other smaller freestyle tournaments?