According to Imagination, that is NOT the case. I will be posting a follow-up anaysis piece shortly. But in a nut shell, Imagination CEO made it very clear during the conference call that his company will move the MIPS architecture "go forward."
Clearly the merger gives ARM a little more competition as the game increasingly shifts to supplying a full suite of SoC blocks.
Imagination will gain leverage selling graphics and other cores into set-tops where MIPS is strong and Imagination could help MIPS gain more traction in mobile.