I received two messages about this sad news almost simultaneously - from Mark Jackson and Joe Polchinski. Guiseppe Longo (and maybe his collaborators) has downloaded the pictures from the Hubble Space Telescope, and it is "just a pair of interacting ellipticals sitting in a rather faint cluster," not a cosmic string.
He promised various people to be informed quickly, which is why you are informed so abruptly by a leading physics blog (one hour before our colleagues at Cosmic Variance) even though the news is not the most thrilling outcome you could have hoped for.
At any rate, it is time for science-haters to celebrate. ;-)
Some people ask how the picture would look like if there were a cosmic string. I think that it would look like this one:
Let me add to the main text that Joe Polchinski's estimated probability that a cosmic string could be seen was something about 10%. Joe would have therefore told you a smaller number for this particular case, I think. In this sense, it is not a surprise that the conjecture that CSL-1 was a cosmic string was falsified. While it is not a surprise, it is still a disappointment.
A confirmation that it is a cosmic string would have meant much more obvious progress. This observation has falsified one particular case but it has not falsified the idea of cosmic strings in general. And just to be sure: it has of course told us nothing about the validity of string theory as a fundamental theory.