Neither ATI/AMD or nvidia seem to be working on a physics engine, so my guess is they're waiting on either havok fx to pick up or microsoft to make a decision on direct physics. Since havok fx doesn't seem to have any support, that leaves ageia all alone in the hardware accelerated physics market. Since they're giving their SDK to anyone who pledges support for the PPU, I see many a small firm choosing ageia to save some money now that the PPU has dropped to a more reasonable price.
For the PPU, you have a product that has no timeframe or replacement in development. Sure ageia is allowing their partners to finally make 1x PCIe boards, but there's not really a need for them or any physx card yet since there's nothing physx specific about the physx card (the entire physx engine exists in software and certain calculations are offloaded to the physx card). But, in the end the entire venture hinges on next gen consoles.
Though neither the ps3 or 360 posess a PPU, ageia has "certified" them to be able to fully support their physx software thanks to their abundance of computing power. With unreal engine 3 making use of physx and a popular game called gears of war making good use of unreal engine 3, the PPU could be 1 port away from popularity.
Finally, don't bring GRAW into this. It's a craptastically programed game that uses both havok and physx simultaneously, doubling the CPU requirement when the physx card is present. A good example is city of villans because it only uses the physx engine and sees a large performance boost from the PPU.
Just my $0.02