i have a jag bass, and i think that the reason that they discontinued it (at least in the states anyway, if japan is indeed still making them) is because, for me, its tone falls short of a jazz or p bass. to me, the stock the pickups are mediocre at best, the preamp crude, (to boomy and bright), IMO, the bridge pickup is unusable alone, and having a routing hole right in the middle of the body under the pickguard for the preamp. it even could partially be that the actual body shape also makes it not sound as good as the other two. the problem is, i love the look of it, so i'm currently doing a few mods on mine to make it sound the way that i want it, since i intend to keep it.
another completely different reason, and probably more accurate, is it may be that it just didn't sell as well as expected, and with the new squier jag bass coming out, they possibly felt it to be somewhat redundant.