I wonder whether the disappearance will be explained to us in Oblivion.
And by in Oblivion, I actually mean in it. If you're ever noticed whilst playing Morrowind that Daedra Lords always have Dwaven weapons then you'll understand why I think the Dwarfs might just be in Oblivion.
Dwarven armor has been confirmed officially by Bethesda in their new codex for skills (under Heavy Armor it lists Dwarven). They won't (I assure you with 100% guarantee) that they will not let armor slip in the mix without a little lore (or even new dwemer constructs) being added as well.