Yeah, I'm pretty sure they re-enabled it, didn't they?

There were a few things they we going to whack with the nerf-stick, but never happened.

Edit: Just to reiterate for Ganga, it can't be upgraded, unfortunately. I have a nice Cruel Great Sword of Quickness I'd love to upgrade, if they ever put out upgrade formulas for Normal/Magical/Set items.

I really hope they add the upgrade for set items, at least. Then Aldur's set might be decent.