All pointers say that in the next budget from the Obama government, NASA's moonshot Constellation program will be axed. It's not necessarily the end of the dream, though: The plan is to involve private space companies  much more.
Constellation has already cost $9 billion, and closing it will result in even more costs incurred in the form of pay-offs to big contractors like Lockheed Martin. But the proposal from the Office of Management and Budget is to cancel it rather than refine  it or delay it as had been previously  mooted, because without an additional $3 billion per year, Constellation would likely fail to ever deliver its planned suite of Ares rockets and space vehicles destined for the moon and servicing the International Space Station.
If that is the path that the President chooses to follow, you can bet it'll be controversial as well as sad. The moonshot plans announced by George W. Bush hit the headlines in a big way as a sort of positive sign about technology, human exploration, and the successes of the U.S. space industry--centered on NASA, of course. Canceling Project Constellation will knock some of the spacey-sheen off NASA, and it also makes it sound like it's too expensive to go to the moon nowadays. And that almost suggests the dollar is more important than genuine human adventures. It's a move that could also threaten the jobs of thousands of NASA employees, and those in its contractor partners.
But apparently the plan is to repurpose the money NASA would've got for Constellation, and to direct it toward other research and development--both in terms of human space travel, and robotic systems--such that NASA will prepare for human exploration of Mars. This is the real exploratory prize, and some commenters have been noting  that choosing to go to the Moon first was perhaps a mistake. It'll take longer to get to Mars than it would've taken Constellation to get to the Moon, but by focusing its efforts in this way NASA may actually get to Mars sooner than planned.
And the other part of the budget plan is to steer NASA to working more with private space companies--like SpaceX and Orbital Sciences , which have already been tipped to build "ferry" space rockets that will take the place of the Space Shuttle in servicing missions to the ISS. A closer NASA collaboration with companies like this could actually create lots of jobs and economic benefits that might otherwise never have been realized. The private space game is already heating up all by itself--driven by pioneers like Burt Rutan with his Virgin-backed SpaceShipTwo project which will soon zip paying space tourists into the void. NASA involvement could also boost efforts like this, making the most of NASA's expertise and vast facilities for testing and development.