"I read on another website that IWD 2 will be the last game using 2D bioware infinity engine. Is this true and if so why would they not continue the IWD and Baldurs Gate 2D engine seeing as it is EXTREMELY popular??"
It is as you said, supposed to be the last of its kind BUT it wont be. This is nothing but a hunch really, a mix of logic and intuition but i'm almost sure there will be more 2d Infinity Engine games released by Bioware. Their official take on this is simply "Not at the moment". Think of how successful Baldurs Gate was...do you realize how much money that made them?
Yes the 2D infinity engine is certainly ageing....but it's ageing with style.
If it comes down to it heres the truth : these games still sell. As long as they do they'll keep making them. The harsh truth of any business, but for those of us who love Icewind Dale it's good news