They got caught up in the spat between Oracle's Larry Ellision and Bill Gates. Ellision saw Acorn's set top box development and decided that a similar concept of a thin client Network Computer connected to large severs running his software would be the way to break the Windows hegemony on the desktop. He touted Acorn's technology as demonstrator just well enough to get Intel worried, and when they announced they would support the concept with an x86 based device, Ellison then promply dropped Acorn. Apparently leaving them well out of pocket for work on the next generation of NC's of which the StrongARM NC was one.
Acorn then took the existing ARM7 based units and tried to develop the concept as a cheap internet terminal, for use in kiosks and a consumer version sold by Bush. This actually worked quite well initially and I convinced a couple of friends to buy one. But the commitment from ISPs were lacking, and after being passed around several times, it was eventually dropped leaving the boxes unsupported.
Anyway thats my understanding, but I'm sure piers knows far more, if he's allowed to say.