However, according to Bradley D. Brown at TUSC, Oracle has now (re-) confirmed that they are still working on it.
For some time now the ACE Director community has been asking Mark Townsend (product manager for the Oracle DB) when the 11g version of Express was going to be available. He was consistent in saying that they wouldn't even consider releasing it until 11gR2 was available. Well...it's available now! So the ACED community said "OK, Mark..." and he responded with - it's already in the works and should be out...when asked "when..." we got the standard answer. The good news is that it's coming! Another piece of good news is that they raised the DB size limit from 4GB to 10GB. That makes for a nice free DB engine.
This is good news, since it has been a very long time since XE 10g was released. With Microsoft releasing updates to its free version of SQL Server at the same time as the full version, I think Oracle should do the same.
But hey, it's good, it's free, and it's coming eventually, so I'm not complaining! :-)