SOE's contract with LucasArts ends in 2012. I'm sure the cost to renew was greater than the revenue a F2P SWG would genereate, especially with TOR looming.
The game is most likely going to be heavily instanced/zoned. It's built on the AoC engine and is being cross-developed for Xbox 360. If the game is going to run smoothly enough to allow real-time combat in detailed urban settings, there really isn't…