LG took a break from the Nexus program in 2014, then came roaring back in 2015 to release a sequel to the much-beloved Nexus 5. There won't be a followup to the Nexus 5X this year, at least not from LG. The company has said it needs to focus on its brand in 2016, not the Nexus program. Job one in tending to its brand is apparently to fix that watch problem.
Google regularly hops between OEMs for the Nexus program, so LG's lack of involvement doesn't necessarily mean anything for Nexus phones in general. LG would simply rather spend time and resources promoting the G5 and its collection of accessories. Someone might even make a 5-inch Nexus phone.
It's also going to take some time to fix the Watch Urbane 2nd edition. This device was on sale for a few days in limited locations, but was canned before the full release. Reports have since suggested this was due to a defect in the display. LG says it plans to have the watch back on sale in the second half of 2016. However, with that much time, I expect this will be a distinct piece of hardware with the same name as the last one.