Yes, this is definitely still running! We announce the winner of the quarter's contest around the same time we announce the "members of the quarter" folks. In fact, Peggy won it for the Fall 2010 period! (That thread is still in the Announcements area; previous quarter threads are in the General Archives. Although, it was never noted in the thread that your prize will be a piece of art from Linda -- who, as she's posted elsewhere, has run into some RL difficulties, so I imagine she'll be a bit late with it.)
You can also sometimes spot the prize that each winner got -- it's noted in the teaser line of the story, or in the artwork's title, depending on what the person received. (It varies, and depends on who's volunteered to provide prizes.) They do sort of often come out pretty late after the person "won", though -- a story prize that Joan did for Beth was just posted a couple of days ago, and it was the prize for Beth winning the comments contest last summer quarter.)
A reminder isn't a bad idea, though! I too am hoping that folks have just had a busy quarter where they haven't been able to comment on things as much as they have in the past... but I'd like to see us get back more on track with that. Of course, I need to step up and do my part as well. (As Lyn notes, I'm better at commenting on art than stories, as it takes longer for me to consider what to say about stories.)
But yes -- every comment that you leave in a quarter becomes a kind of "raffle ticket" entry. The more comments you leave, the more likely it will be that your name will be "drawn" at the end of the quarter! (Although, we have had examples of people winning when they didn't leave as many comments as some others -- which is fine! It just underscores the fact that there is an element of pure chance to it.)
We will keep doing this every quarter.

We haven't yet figured out who the winner is for Winter Quarter, since we have only just started the processing for that.