No, they told the community to go to Xbox.com and use the forums there.
Typically, the publisher of a game provides all of the support, which includes the community team. It's even true of Bethesda Softworks and these very forums.
Shutting down a forum is still disappointing, but I think you were overly harsh in your opening post.
Well, they are, but they are limiting what the Fans get to talk about. They can only comment on images and blogs and such that the company puts up. To me, this is too much of a limit on communication. As much as I don't like some of the threads around here, I am glad they are here so that folks can express their opinions and views. Also, I for sure would not want to be limited to what I can talk about in the game.
All the time we have to spend on our forums, is time our (small) online team are unable to bring you media, screenshots and other exciting exclusives. Therefore, we have implemented a brand new comment system on each page that allows you to continue your discussions, reply to each other, upload images and much more while at the same time making it easier for us to moderate. If you still wish to discuss all things Lionhead outside of this comment system, please use our Facebook page at http://www.facebook.com/Fablegame or join in at http://forums.xbox.com/.
If they are having so many problems moderating the site, all they have to do is what Bethesda does. Kidnap, I mean recruit some members to be Moderators, give them clear direction and let them take care of the forums. Gstaff does not have to do much on these boards because we do so much of it. This leaves him free to integrate the social web with the companies marketing efforts which is what he is paid to do, among other things. He takes care of the strategy of the boards, while we take care of the tactics.
Even with the new limitations on their page, people can freely post on their FB and the Xbox forums, so I don't think the developers are limiting
themselves as much.
It is a shame there aren't more official forums that have managed to set up such successful volunteer moderation.

I think this sums up my opinion on that matter. I will have to mention though that the demographic that goes onto a forum is very different than the ones that use social media. So in some aspect they will lose out on a unique voice, but if that's what they feel.
This is very true, and even if you had the same people on both channels the difference in structure affects what is talked about. However, hopefully they already keep tabs on major fan forums.
I had to look up what games Lionhead made. As for closing the forum.

what percentage of their game players use the forum?
A minority, but forums tend to attract several key groups - very dedicated fans, very social fans, and people reporting problems. This is all useful information, and if they aren't getting it from an official developer forum they'll need to get it through other means. Admittedly, none of these are unique to official forums, or even forums themselves.
(Also, while these groups may not be a direct representation of the fanbase or customer base as a whole, they are still representative.)
No game developer, or publisher, should limit themselves to one channel to get player feedback - but forums are an excellent way to develop a community, so I certainly understand why members of that community would be upset to see their forum closed and the people there dispersed.