Yes the initial plan was to drop the arbitrage abilities, but when we placed version 2.3 inside beta we got an pretty load of comments from our userbase about this decision. It was more used then we even realised.
So to correct the situation we as a team have decided to let it return. It will make an comeback after the 2.3 beta release and we are having a look if we can empower it a bit more. So in conclusion, we are NOT dropping it after all, we plan to expand it instead.
There are many ways to do arbitrage, the one we have implemented right now is by doing arbitrage on 1 exchange. This means this exchange has to have 3 pairs to make the arbitrage cycle complete. For example bitstamp will not work with 1 pair, but Cryptsy, Bittrex, Poloniex and BTC-e will work.
About Cryptsy... we support them and we know there are rumors going around. We track them as well and we try to get an hold of whats going on exactly. As up till today we have found no indications there are true bad things going on. Official channels deny everything and we do not believe anybody who has an account over there will be in harm. But we keep our eyes open course, if it changes we will issue warnings directly.