Yes, the normal challengers have been removed from the battledome while the current plot (hannah and the ice caves) runs its course.
The war challenegers have been removed because, presumably, they've been beaten.
For futher information on Hannah and the Ice Caves, watch the news (
http://www.neopets.com/nf.phtml) and view the comics (
http://www.neopets.com/winter/plot_hic.phtml)