It is Googles’ fashion to shutdown services which are not popular enough. The latest victim was Google Code project  which was started in 2006. Google was very frank on the press release I suppose. I would like to quote the following.
When we started the Google Code project hosting service in 2006, the world of project hosting was limited. We were worried about reliability and stagnation, so we took action by giving the open source community another option to choose from. Since then, we’ve seen a wide variety of better project hosting services such as GitHub and Bitbucket bloom. Many projects moved away from Google Code to those other systems.
It is true that GitHub gained increase popularity among developers for code hosting and many developers are comfortable with it too. However as Google claimed it was true that in 2006 the choices were limited, even GitHub started in 2008 . However the large picture is quite astonishing. In 2006, Google was a giant company and Google Code was one of the projects they have started. They could have done something better than GitHub, I believe.
However it is good to see the dynamics of Google, other than few, most of their interests never seems fixed. It quite sounds like the open source way too.
I worked closely with Google Code repositories few years back and it is quite sad to hear that it is getting shutdown. But I think it is the right decision they took. Need to move forward with new interests and causes.
Good Bye, Google Code for the support hosting open source projects through the decade of service.