From an email I received from Ed Klopek:

E-mail from OverDrive
Streamlining the eBook Experience – Eliminating Mobipocket eBooks

As part of our ongoing initiative to streamline the user experience, OverDrive has ended support for the Mobipocket eBook format which means that this format is no longer available for selection in Content Reserve. For libraries with Mobipocket eBook collections, OverDrive will replace any copies with a corresponding number of units for use with Kindle or other supported reading devices. There will be a very small number of titles that we are unable to replace with other formats. For those libraries affected, we will contact you separately with a report of these titles and issue a full content credit for amounts paid for those titles.

If your library hosts a Customer Support form, references to Mobipocket eBooks should be removed and “Kindle Book” should be added once available at your library’s Virtual Branch website.
They were removed right after the Kindle format became available on OverDrive. I wonder if this was part of the Amazon/OverDrive Kindle deal.