Yes, it's been closed for awhile.
Per mouseplanet: ""it's a small world" closed for a nine-month refurbishment, and should reopen in late November 2008. The nearby Toy Shop is also closed during the renovation."
and "This attraction is currently closed for an extensive refurbishment. It closed on January 22, 2008, and will remain closed until approximately Thanksgiving 2008 at which time it will reopen with Christmas decorations."
In case you didn't know, when you're planning your next trip, you can go to disneyland.com and go to their "calendar" section. Get the dates of your trip in the dropdown menus, and it will show you what attractions are scheduled to be closed. Of course anything can change, but usually things won't suddenly open when they are supposed to be closed, so it can give you a good idea what to expect!