It seems odd to me that they would choose to drop support for Ubuntu because many games won't work anymore. If someone wants to run Steam on a platform that won't be able to run many of its games (let's say 35% of the whole library, 50% of top 100 games), is that really Steam's problem?

Steam having a 64-bit client doesn't really change anything. Linux users aren't morons, if someone wants to run Steam on Ubuntu they should be able to do that knowing that they might not be able to play some games. This is already something you have to accept when using Steam on Linux regardless of distro!

The alternative is your Ubuntu users can't play any games. How is that better?