Thanks to pressure put on the properties from sources other than Starwood Consumer Affairs, I got a call from the GM of one of the properties on Friday, (who called me because the GM was told to speak to me and find out more about the issue). The gist of the conversation (very polite) is as follows:

1. The GM admitted that they have goofed up big time. While Le Meridien was still accepting reservations until Jan 09, Grand Mauritian had been closed for bookings in Dec 08. They could have informed me earlier, somehow it slipped under the radar.
2. It seems that people who have booked through other channels (i.e. TAs, tour operators etc.) were informed by the hotels/ contacted the hotels when they became aware of the situation much earlier than me, and were accommodated by the agencies which booked the original reservations to their satisfaction.
3. A few reservations like mine (no wonders where they came from- spg.com) were missing from the radar until end Feb because the reservation manager goofed up. They were offered accommodation in Sugar Beach and in case like mine (I could not find how many but it seems not a lot most likely in single digits), offered accommodation at other properties. That should be an eye opener to anyone who books through spg.com
4. The GM feels that the compensation offered to us (15,000 starpoints each) is a lot of starpoints, and the fact that we were paying almost 30% more that the original bookings was brushed off.
5. The owner is going to be called up by a Dubai based business associate of mine who is a big builder whose properties the real estate company of the owner markets. My associate will tell him what mess is happening thanks to his wedding (for whatever it is worth) and how his properties are letting down customers.
6. I will update if there is any further development through these other channels.
7. Nothing is happening on the starwood Consumer Affairs front so far. I will update these developments as well if/when anything happens.