Anyone know why they discontinued this pistol?

It was discontinued in 2009 or 2010 - and speculation then was that "shooter malfunction" (limp wristing) and not "pistol malfunction" was the cause of too many warranty claims and returns of KT P-40's that the factory technicians could find nothing wrong with.

It's not a range pistol or pleasant to shoot in 40 caliber from such a small package - but it fits comfortably in a pocket and dependably provides plenty of firepower. Many owners like them and have no complaints whatever.

I buy used handguns all the time, but I am such a kel-tec fan, I buy them new.
When they came out I got the:
P11 9mm double stack
P40 40sw
P357 barrel that fits in P40 357Sig
P32 32acp
P3AT 380
PF9 9mm single stack

I carry the the P3AT 380 with a:
1) DESANTIS M44BJG5Z0 holster
2) ArmaLaser Kel-Tec P32/P3AT TR1 Laser
3) Belt clip left side attached with 4-40 acorn nut
4) Handload Gold Dot 90 Gr 6.2 gr Power Pistol 1100 fps chrono

When hunting I handed the P3AT off to a friend who instantly finished off an antelope buck that was down but still kicking. The 90 gr Gold Dot hit the heart.

I am a big Kel Tec fan as well, but have never seen or heard of a P-40. If I ever see one for sale, I will be sorely tempted to snag it.