The Constitutional Court quashed the law, and phrased high requirements for such a law in general with regard to peoples' rights and due process. Furthermore, a new basic right has been derived, which explicitly states that everybody has the right to use their computers and networks without anyone snooping around. Although this decision has made a federal snooping law very difficult, the possibility was not denied outright, however. Thus, everybode involved claims victory at the moment.
Coverage of the case can be found on Golem and Heise (both in German) as well as BBC.