If you're into widgets, I recommend taking some time and going through these two posts:
CNET's discussion of the maturing of the widget space, and Widgetbox's CEO Will Price's response.
The CNET article seems to use the terms "widgets" and "applications" interchangeably, which is a bit misleading, but for the article is well researched with a number of quotes from companies like Slide and RockYou.
I found the discussion of whether the term "widget" is falling out of favor to be pretty fluffy:
That means some companies are stepping away from the word "widget" altogether because it can imply a fleeting, lightweight commodity. Slide, for example, in recent months changed the language on its Web site and stopped trying to explain to advertisers what a widget is, according to the company's director of communications. It now describes the company as a maker of "social entertainment applications."
This reminds me a lot of the trend for companies to remove the ".com" from their name towards the end of the last boom to try and imply more stability.
My take is that this is PR folks trying to justify their jobs - what we call the stuff is a peripheral issue at best.
Will Price makes the point that the fragmentation of the web, which is the driver of the widget phenomenon, shows no signs of abating:
On the web, will access to users concentrate like retail sales or will the very different economics of digital allow for mililions of front-doors to users and an even balance between providers of syndicated content and services and their “distributors.” We are clearly betting on the latter.
Regardless of who won this particular debate, I am sensing mounting pressure from the media, the investor community, and the entrepreneurs themselves for widgets to begin delivering more than just reach.
I feel like the widget honeymoon is over.

