An evolvable hardware seems like a fantastic idea. Yet, it can be scary. A hardware is able to change itself to fit the environment seems like a mimic of human. With the help of neural network from the software world, an intelligent being made of metal and plastic will soon be built.
Nonetheless, moving forward is an inevitable event. We just need to learn along the way and, be cautious and responsible of what we do.
I think Erebus is on the right track in terms of what happened with this. Conventional hardware has just advanced so rapidly that the need to adapt to newer and faster processors has kept ahead of the need to optimize.
At some point, hardware may very well become so complex as to be unmanageable by humans. These advances may very well slow or stop and then optimization will be top priority. At that point, techniques like self-evolveable hardware will become viable and possibly even necessary.
I think the whole concept just was overcome by events. Regardless of the versatility of your evolvable technology, it just could not compete with the pace of standard component improvements. Look at the power you get each year and then think about holding hardware for five or ten years. It just doesn't make any sense and it is clearly not cost effective.
It's like reuseable software. It's a great idea, but few people do it because of the rapid changes in language options and extensions.
Just my opinion.