I am still at Valve, still working on VR R&D with the original core team and a bunch of people you've never heard about that have joined over the years.
The rumor mill has been running overtime lately! As Gabe has confirmed, yes Valve let some people go. VR wasn't the main group affected, it certainly wasn't half the FTEs in hardware. As you can see from the jobs website we are still hiring for VR and other hardware-related skills.
Does anyone really believe we would abandon a nascent media like VR, especially one we have such a significant position in? Hardware is of great strategic importance to our future, VR and otherwise, abandoning that capacity would be stupid.