I think they at all costs want to avoid the enormous amount of negative press that they'll get if they start shutting down servers. People have been saying 'WoW is dying' for years, but if they actually get something to hang that statement on, it could fast become a self-fulfilling prophecy, or at least I believe that to be Blizzard's fear. That being said, Blizzard need to merge low population realms.
Something happened in between Blizzard enabling faction swaps and lowering the realm transfer cool-down to 3 days. Populations started to shift around rapidly.
In the middle of WotLK I resided on a medium population realm that was almost exactly 50:50 Alliance to Horde. However, most of the good raiding guilds were on the Horde side, so you can imagine what happened when Blizzard introduced faction transfers. A large chunk of the Alliance switched over to Horde for the chance to join the better raiding guilds. Today that same realm has a ratio of 1 Horde to 0.05 Alliance (even the Horde side is quiet, so I can only imagine how bad the Alliance is), and it's the same story for a lot of realms. It's rare to find one where the faction populations are balanced - one faction will be the dominant one and as more and more people are attracted to the higher population, better economy, more chance for PuGs and RBGs and whatnot, that will simply become more extreme.
Meanwhile there are a small handful of realms where the populations just keep rising. Twisting Nether, Stormscale and Kazzak (EU) are some of the most prominent examples. Guilds are migrating from dying realms to these higher population realms all the time, and who can blame them? It'll only get worse. Soon there are just going to be so many realms with hardly any players and absolutely no reason for anybody to migrate to them besides personal "my friend plays there" reasons.
The cross-realm zones that Blizzard plan to introduce may alleviate the world PvP issue since Mists of Pandaria is going to put a lot more emphasis on world PvP, but a realm economy, guild and PuG prospects will still be restricted to a realm (excluding Real-ID/openraid style PuGs). This compounded with the fact that gathering nodes are now shared between cross-realm zones means low-pop realm economies may struggle more as a result.
So the easiest solution for Blizzard would be to simply merge the worst of the low population realms - you could probably merge 10 of them right now and still not have Kazzak's population. Alternatively they could close down faction transfers and increase the cooldown on character transfers, but the player base would protest that decision.
However right now the current state of some realms is unacceptable and I think this is a serious problem Blizzard needs to be working a lot harder to address. I know that it's summer, there's no content to do on live except farming Dragon Soul for the 43874th time, which takes 1 hour a week, Diablo 3 is out so there are a lot less people playing WoW right now than there normally would be. Some realms that seem quiet right now may pick up again when MoP launches and winter rolls around, but there will still be some genuinely dead realms that need sorting out, merged, etc.
That's just my thoughts on all of it anyway.
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