Seems like Portal 2 will be a full retail release, with a new single-player campaign, a new co-op campaign, new characters, more Aperture Labs, more test chambers, more GLaDOS, and more awesome.
It's hard for me to say I'm "disappointed" in this announcement. I've stopped expecting news on Episode 3 a long time ago. Even if they do announce something at GDC, they've pretty much blown their chances on the whole episodic content thing at this point.
Even if they make Episode 3 a full retail game, it still won't be Half-Life 3, and that's a let-down. But at the end of the day whatever they release will still be awesome and I will still pay money for it. Valve might not have lived up to expectations, but I'm not about to boycott anything.
I'm sure Valve would love to have come out with Episode 3 a long time ago and already be coming out with Half-Life 3, but for one reason or another they haven't. The reality is, you can't force this stuff. Bitching about it won't make them work any faster and in fact may make them come out with less of a product to meet the demand.
Such a delay on Episode 3 is a loss for Valve, and they might have screwed up somewhere. It happens. But they aren't magic and all I can really expect from them is that they've learned from whatever happened with Episode 3 and will come out with more awesome quicker from now on. They still need to figure out how to balance content and development time. The sweet spot is somewhere between Episode 3 and L4D2, and I think they'll get there eventually.