On my recent SFO-MEL flight, there was no hot towel service. And as reported by aztimm nor were there any towels on the same flight a couple of days later. Two data points only, but the trend suggests this may be more than a simple service fail or coincidence. It would be sad if yet another nice feature of Business is but a memory. Its not like the towels are top quality (as some other airlines use), just that they fulfill a valid use. Also, I noticed that the towels in the toilets have been replaced by paper towels. Another enhancement?
My husband said he saw the towels out in the galley when he was going to the lav, so they definitely had them. For some reason, they just decided not to distribute (and collect) them.
I probably wouldn't have really noticed except that I flew an AA domestic flight earlier on the same day where they did distribute hot towels.
I've only ever seen paper towels in any airplane toilets in biz on any airline I've flown. Even CX just had paper. I'll be on the lookout for real towels when I fly F on the 380 (SYD-DFW) in a few weeks.