Formula is still around, but I agree with SteveC and Ken that it's less visible since the PWA went to slalom. Also, at the "lower" level, I think some of the windsurfers who tried formula racing decided, for various reasons, to go back to longboard racing. I wrote about that a little in my blog.
In some places they run formula racing when the winds are moderate, and slalom when it's really windy. That seems like a good way to go. Quoting Andreas Macke from http://g-42.blogspot.com/
"in the Gorge, we're all basically racing 2 boards and 4 sails, just like the pros - it's just that we distribute that over one Formula and one Slalom setup, as opposed to two sets of slalom gear, giving us more range and variety for only marginally more money (as the large slalom stuff isn't really that much cheaper than formula gear)."
For less windy areas, doing 42 with a longboard and slalom board might also be a good deal.