It got canceled because they had a rash of crashes either at the end of Clinton's term or very early in Bush's.
Hate to correct you, but the Osprey (MV-22) entered service and is in Iraq as we "speak".
From (God, forgive me for quoting wiki) wiki:
http://en.wikipedia.org/wiki/V-22_Osprey"US operators
Marine Corps crew training on the Osprey has been conducted by VMMT-204 since March 2000. On 3 June 2005, the Marine Corps helicopter squadron Marine Medium Helicopter 263 (HMM-263), stood down to begin the process of transitioning to the MV-22 Osprey. On 8 December 2005, Lieutenant General Amos, commander of the II MEF, accepted the delivery of the first fleet of MV-22s, delivered to HMM-263. The unit reactivated on 3 March 2006 as the first MV-22 squadron and was redesignated VMM-263. On 31 August 2006, VMM-162 (the former HMM-162) followed suit.
The Air Force's first operational CV-22 Osprey was delivered to the 58th Special Operations Wing (58th SOW) at Kirtland Air Force Base, New Mexico on 20 March 2006. This and subsequent aircraft will become part of the 58th SOW's fleet of aircraft used for training pilots and crew members for special operations use.[32] On 16 November 2006, the Air Force officially accepted the CV-22 in a ceremony conducted at Hurlburt Field, Florida.[33]
A MV-22 of VMM-162 in Iraq, April 2008.
The Osprey entered operational service with the U.S. Marine Corps in 2007, in some cases replacing existing CH-46 Sea Knight squadrons.[34] On 23 March 2007, HMM-266 became Marine Medium Tiltrotor Squadron 266 (VMM-266) at Marine Corps Air Station New River, North Carolina.[35] On 13 April 2007, the U.S. Marine Corps announced that it would be sending ten V-22 aircraft to Iraq, the Osprey's first combat deployment. Marine Corps Commandant, General James Conway, indicated that over 150 Marines would accompany the Osprey set for September deployment to Al-Asad Airfield.[36][37]
On 10 July 2007 an MV-22 Osprey landed aboard the Royal Navy aircraft carrier, HMS Illustrious in the Atlantic Ocean. This marked the first time a V-22 had landed on any non-U.S. vessel.[38]
Crew members refuel an MV-22 before a night mission in central Iraq, February 2008.
On 17 September 2007, ten MV-22Bs of VMM-263 left for Iraq aboard the USS Wasp. The decision to use a ship rather than use the Osprey's self-deployment capability was made because of concerns over icing during the North Atlantic portion of the trip, lack of available KC-130s for mid-air refueling, and the availability of the USS Wasp.[39]
The Osprey has provided support in Iraq, racking up some 2000 flight hours over three months with a mission capable availability rate of 68.1% as of late-January 2008.[40] They are primarily used in Iraq's western Anbar province for routine cargo and troop movements, and also for riskier "aero-scout" missions. General David Petraeus, the top U.S. military commander in Iraq, used one to fly around Iraq on Christmas Day 2007 to visit troops.[41] Then-presidential candidate Barack Obama also flew in Ospreys during his high profile 2008 tour of Iraq.[42]
The only major problem has been obtaining the necessary spare parts to maintain the aircraft.[43] The V-22 had flown 3,000 sorties totaling 5,200 hours in Iraq as of July 2008.[44] USMC leadership expect to deploy MV-22s to Afghanistan in 2009.[43][45]
General George J. Trautman, III praised the increased range of the V-22 over the legacy helicopters in Iraq and said that "it turned his battle space from the size of Texas into the size of Rhode Island."[46]
The US Air Force's first operational deployment of the Osprey sent four CV-22s to Mali in November 2008 in support of Exercise Flintlock. The CV-22s flew nonstop from Hurlburt Field, Florida with in-flight refueling.[3] AFSOC declared that the 8th Special Operations Squadron reached Initial Operational Capability on 16 March 2009, with six of its planned nine CV-22s operational.[47]
Naval Air Systems Command has devised a temporary fix for sailors to place portable heat shields under Osprey engines to prevent damage to the decks of Navy amphibious ships, but they determined that a long term solution to the problem would require that these gators be redesigned with heat resistant deck coatings, passive thermal barriers and changes in ship structure in order to operate V-22s and F-35Bs.[48]
In June 2009, CV-22s of the 8th Special Operations Squadron delivered 43,000 pounds of humanitarian supplies to remote villages in Honduras that were not accessible by conventional vehicles.[49]
A Government Accountability Office study reported that by January 2009 the Marines had 12 MV-22s operating in Iraq and they managed to successfully complete all assigned missions. The same report found that the V-22 deployments had mission capable rates averaging 57% to 68% and an overall full mission capable rate of only 6%. It also stated that the aircraft had shown weakness in situational awareness, maintenance, shipboard operations and the ability to transport troops and external cargo.[50] That study also concluded that the "deployments confirmed that the V-22’s enhanced speed and range enable personnel and internal cargo to be transported faster and farther than is possible with the legacy helicopters it is replacing".[51]"
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