The VDPAU is packaged as standalone library. It’ll be still included into proprietary nVidia drivers to avoid additional installations. As I understand it’s done to provide some generic way for communications between OS and hardware for Linux. Something similar to DirectX. Good idea in my mind but I suspect that the other producers of video adapters will promote their solutions instead of using and improving of VDPAU.
In any case, nVidia video cards is still the best option for Linux users. Especially with supporting of VDPAU which allows to play HD content even on Atom processor.