Allright, it's now 2010, or almost, all around the globe and still there is no mention of the much coveted Half-Life 2: Episode 3.
In the meantime though, Valve have been busy with other tasks. First, we had Team Fortress 2. Then, out of left field came Left 4 Dead. A bit later and we have Left 4 Dead 2 which is Left 4 Dead with everything being bigger and better.
Okay.
But why no Episode 3? Why no other single-player releases, like Portal? Is it just because those games don't generate enough revenue anymore?
I don't think so.
This recent furore into multiplayer gaming has allowed Valve to do one thing; upgrade and expand their architecture, try out various things in the realm of multiplayer games, while still making money off it.
But where does it all end? Are we going to see Left 4 Dead clones for three years? Maybe an alien or combine invasion themed game based on the same mechanics? Have Valve suddenly shifted focus to releasing fun, over-the-top multiplayer games instead of state-of-the-art story-driven FPSes? In short, what about Half-Life?
I think Valve are up to something big.
Like a MMO Half-Life universe.

No, they are too busy making Steam the mandatory piece of drm-ware on every major triple A game release in the next years. : D

Nah, episode three is just being developed on Valve time, nothing more sinister or sneaky than that.

Screw Episode 3, wheres Opposing Force 2: Combine Soldier?
In all honestly, I could care less what they do with the entire Half Life series. It's a lackluster game thats only real high point is the quality mods that were made for it and the sequels.
Also, another answer to your question, I think Valve is focusing more on the console market, who don't care about Half Life. While PC gamers are the minority, the only PC game that they really focus on anymore is TF2.

It's not really unique to Valve -- over the last few years it has almost become mandatory for a title to have at least some form of multiplayer. Moreover, games that have watered down tack-on multiplayer are usually excoriated to the point of feeble sales.
Valve is pretty much in the same boat as Blizzard. They are so widely popular and have a handful of successful and well known IPs such that there is no pressure on them to produce titles with any great rapidity. While Blizzard makes money off of WoW, Valve makes money off of Steam so they have a steady flow of income.
In regards to future titles I think Portal 2 is bogged down in multiplayer development. Episode 3 is probably further along then most people think but they probably have to package it with something else in order to be able to sell it retail in a ~$50 box. They've recently announced an 'Add-on' for L4D2 and who knows if they'll charge for that or not.
But again, not only are they operating safely in the black like Blizzard but, unlike Blizzard, they still retain a fairly gamer/developer friendly hierarchy as Gabe Newell is still the boss as opposed to the Activision Board of Directors so you don't have nearly the same amount of pressure to maximize profit.

I'd imagine they will. They already have a DLC store set up, and it's not like Team Fortress 2, where they've released every other update for free. It would look weird if they started charging for those.
At the same time, I think Valve is onto something when they don't charge for updates like that. It keeps the multiplayer community connected into one whole part, and DLC for multiplayer has traditionally split that up. Who knows what will happen if they decide to charge for DLC for L4D 2?

I don't imagine they would. They didn't charge for the L4D1 DLC on PC, while they did for the 360. It would get people more up in arms if they were to charge for the L4D2 DLC, especially since many of the higher-ups have said that part of Valve's business plan is to release free content for their games.
The DLC store is so other companies can have DLC.

Um.
Left 4 Dead 2 Game Add-on #1 Announced
See the bit at the bottom? "Pricing will be announced closer to launch."

Good grief. Is everything a conspiracy? Maybe it's just a case that the Ep 3 dev team ran in to problems or decided to re-do the entire game.

A mutiplayer Portal that requires teamwork to solve Portal puzzles could be a lot of fun.

Valve said they wanted to make it free, MS wouldn't let them. Arses.

One possibility is that they're overhauling the Source engine to put it back at the forefront, where it was when HL2 was released. But, to be honest, it's pretty obvious that they're focussing on the multi-player games, as that's where the big bucks, (aside from Steam) have come from. Financially, single player games haven't really worked out for them so well.

Wha? Half-life and Half-Life 2 have sold more copies than just about every other video game in existence, and is the sole reason Valve, or Steam, even exists.
They'd be foolish to bury the Half-Life series.

If I recall correctly, Microsoft has some severe limitations on the size of patches that developers are allowed to put out. I seem to remember reading articles from disgrunteled developers who were not able to fully patch their game because they exceeded the size-limitations set by microsoft. In other words.. microsoft is really greedy with bandwidth for fixing up games, but really generous with it when it comes to trailers and advertisement.
So the only way for them to bring it out was via DLC. Meh... Microsoft's policy seems to be completely against that what gamers want lol.
Either way, I doubt that Valve will focus more on Consoles anytime soon. I may be wrong but the fact that the orange box generally ran pretty bad on the consoles does not bode well.
I do want episode three though. They may not make anything really innovative ( I don't count portal since its the brainchild of other people who were found by valve ) but their games are always very refined, and their post-release support is probably the best that is currently around on the PC market.