Fate by Numbers is a great game. One of the best freeware games I've played.
To add to Misa's comments: I'm sure all of the actors were unpaid volunteers (friends and family). This, along with being able to use the school resources, probably helped to keep the costs down.
I think you don't see commercial FMV games anymore because they just went out of style and aren't popular enough to justify the costs.
However, there are three commercial FMV games I know of being developed:http://www.yoomurjak.com/
(from the people behind the Agon series)http://www.darkstar.gs/
(one of my most anticipated games and one of the most ambitious projects I've ever seen)http://www.anima-ppd.com/
(Conspiracies 2; I know nothing about this game)