The problem is, the JVM is a horrible, horrible platform for dynamic languages - performance suffers greatly. If the Mono project succeeds, it will be very clear that dynamic languages fare better on the .NET side. I know people involved in the .NET world, and they tell me that MS is aware of performance issues related to dynamic languages (like SmallScript) - and they intend to address them. Sun, on the other hand, has frozen the JVM since the mid 90's, and it's clear that they intend to keep it frozen. Languages like Smalltalk, Python, and Ruby will appear on the .NET (and Mono) platforms, and will have decent performance. Meanwhile, things like Jython will run like a dog on the JVM.
We have no intention whatsoever of working on the JVM, because we know how bad performance would be. Smalltalk is fast (and getting faster) now, but the perception of slowness from the late 80's and early 90's lingers. The last thing we need is badly performing, widely used platform to bring that perception back to life. .NET, on the other hand, is part of our plans