Because, they might not be on a long hiatus. Scawen has admitted himself that he would've released everything a long time ago had he realized that it was going to take this long for the physics, but of course he never foresaw it taking this long. At this point, I'm sure he (rightly) realizes that if he were to release a half complete tyre physics just to get it released, a lot of the community would be disappointed. So instead, he just keeps plugging away at was has been called "the dark arts of sim racing" by other developers, people with teams of programmers and mountains of data to help them out. Scawen is doing it on his own, it's going to take a while to get right.
One of the things I think people do wrong when it comes to S3 is that they always expect it to be right around the corner. Fact is, it isn't. You ought to either play LFS as it is (still as fun as ever when you can get some numbers online) or move on with your life. Instead of expecting to see an update every time you visit the forums, just hope for it. You'll be much happier when one finally comes along.
The only thing I wonder is whether or not this is still a full time job for the developers. I mean, how many licenses are sold nowadays?