Hardly. Development on HotSpot is very active, is now finally out in the open and I believe the changes in the OpenJDK7 HotSpot tree have made their way back into the proprietary Sun Update releases for JDK6. If anything, things have improved.
As to the delay with *Java* 1.7 (as opposed to Sun's implementation, the JDK) this has been delayed by the mess that is the JCP and the deadlock between Apache and Sun over Harmony and TCK licensing. We can only hope Oracle can improve on this situation; there is certainly plenty of scope!