Yes Notch thought progress is puzzling... Fixing SMP is priority #1! But now for something completely different: A ingame texture pack switcher and contest! Yayifications!
Hes also started working on another game on the side. Hes trying to do way too much.
HE hasn't. His company has. He stated that some other dude is working on the other game. Or 2 teams. I don't exactly remember, but either way he is soley Minecraft. Then when both are properly off the ground the whole company (like 7 people) will all work on one solo project, nothing on the side.