Recently, Minecraft gained something that it has lacked during the previous two years of its development. No, not giant mushrooms. Not XP or NPCs. Not the ability to block attacks or create pistons (?). Competition. For two years Minecraft creator Notch’s indie brainchild has existed within a virtual market vacuum. When you consider the inundation of FPS games clogging the shelves at this time (please see E3 2011 for evidence of the scope of this problem) it’s pretty incredible that until very recently, Minecraft has been it. If you wanted to scratch your freeform building itch before 2009 LEGOs were pretty much your only option, and I’m not talking about LEGO Star Wars III: The Clone Wars. 

May, 2011 - Enter stage right: Terraria. There’s no real need for Notch to worry: his game has already sold two million copies and it hasn’t even launched yet. Barring Lehmanic financial mismanagement, Notch will be making games for the next forever, approximately, but there’s no doubt that the entrance of Terraria has lit a fire under the swivel seats in the Mojang office. Regardless of how far ahead they are (we’re talking miles here, so far as fanbase is concerned), there is now another entrant in the race. Inferior has been added to the list of possible descriptors in the forthcoming Minecraft reviews when it is inevitably compared to something concrete, complete, and that is receiving additional coats of polish every few weeks in the form of continued updates. 

Let me be clear when I compare Minecraft to Duke Nukem Forever: I like Minecraft. I do not hate it. But there is an interesting relationship between the two games. Minecraft Classic was a groundbreaking title (if a pre-alpha version of a currently unreleased game can be called a title) in many of the same ways that Duke Nukem 3D was. It laid the foundation for what many are certain will be the defining game of its genre. And in the case of Minecraft, this is a genre that did not (except for the now discontinued Infiniminer) previously exist. When the successor to Duke Nukem 3D landed this year with all the fanfare of a turd in a toilet bowl, the stakes for Minecraft were ratcheted up, if ever so slightly. A game, no matter how glorious its beginnings, doesn’t always end well.

Patch 1.8 will be our first glimpse into the eventual fate of Minecraft. With patch 1.8, Minecraft will begin its transition from sandbox game environment to roguelike game. The fans have demonstrated the quality of user generated adventures and creations that can be experienced in Minecraft, now it’s up to Notch to show us what Minecraft, the Game, has in store for us. The bar, clearly, has been set very high - first of all by Notch and his team but now by the competition as well.

Recently, Minecraft gained something that it has lacked during the previous two years of its development. No, not giant mushrooms. Not XP or NPCs. Not the ability to block attacks or create pistons (?). Competition. For two years Minecraft creator Notch’s indie brainchild has existed within a virtual market vacuum. When you consider the inundation of FPS games clogging the shelves at this time (please see E3 2011 for evidence of the scope of this problem) it’s pretty incredible that until very recently, Minecraft has been it. If you wanted to scratch your freeform building itch before 2009 LEGOs were pretty much your only option, and I’m not talking about LEGO Star Wars III: The Clone Wars. 

May, 2011 - Enter stage right: Terraria. There’s no real need for Notch to worry: his game has already sold two million copies and it hasn’t even launched yet. Barring Lehmanic financial mismanagement, Notch will be making games for the next forever, approximately, but there’s no doubt that the entrance of Terraria has lit a fire under the swivel seats in the Mojang office. Regardless of how far ahead they are (we’re talking miles here, so far as fanbase is concerned), there is now another entrant in the race. Inferior has been added to the list of possible descriptors in the forthcoming Minecraft reviews when it is inevitably compared to something concrete, complete, and that is receiving additional coats of polish every few weeks in the form of continued updates. 

Let me be clear when I compare Minecraft to Duke Nukem Forever: I like Minecraft. I do not hate it. But there is an interesting relationship between the two games. Minecraft Classic was a groundbreaking title (if a pre-alpha version of a currently unreleased game can be called a title) in many of the same ways that Duke Nukem 3D was. It laid the foundation for what many are certain will be the defining game of its genre. And in the case of Minecraft, this is a genre that did not (except for the now discontinued Infiniminer) previously exist. When the successor to Duke Nukem 3D landed this year with all the fanfare of a turd in a toilet bowl, the stakes for Minecraft were ratcheted up, if ever so slightly. A game, no matter how glorious its beginnings, doesn’t always end well.

Patch 1.8 will be our first glimpse into the eventual fate of Minecraft. With patch 1.8, Minecraft will begin its transition from sandbox game environment to roguelike game. The fans have demonstrated the quality of user generated adventures and creations that can be experienced in Minecraft, now it’s up to Notch to show us what Minecraft, the Game, has in store for us. The bar, clearly, has been set very high - first of all by Notch and his team but now by the competition as well.

Good read but I want to point one thing out. 
   
@Thuban said:

 It laid the foundation for what many are certain will be the defining game of its genre. And in the case of Minecraft, this is a genre that did not even previously exist. 

If the patch count is 1.0 or higher, its not an alpha or beta and its officially a game.
At least, that's how I see it.
 
I bloody hope Minecraft can do something fun again, I got bored real fast with the digging and fighting, Terraria all gave me that in a better way.
The items and their upgrades alone was way more fun then anything I ever did in Minecraft, but I really like purpose in my games.

I think you have it backwards. Terraria hasn't raised the stakes for Minecraft, Minecraft is raising the stakes for Tarraira.  
 
Terraria's biggest draw was that it had more "game" content that Minecraft, with a clear hierarchic of goals for the player to complete.  Once Minecraft starts to move in that direction, a direction it was always moving in even before Terraria's release, it's foothold is going to falter. It's not going away, but those that left Minecraft for it because of it's aimlessness will start to return.