Greg Smith wrote:
Last Unicorn did in fact produce a Dune RPG. They were then brought out by Wizards of the Cost. Wizards/Last Unicorn released a limited print run of the Dune rulebook.
There were rumours of changing it d20 before anything else was published, but the line folded with further rumours of difficulties with the licence. This was a bout the time the prequel novels were published, so the Herbert estate may have considered the two to be incompatible.
It was actually the prequel novels that spawned the push for the RPG , I think. The Last Unicorn/WotC book had a forward in it written by Brian Herbert (son of Frank; one on the Prequels' authors). The D20 version was written for playtests, I understand, but the licence was given the chop in the same period when the Star Trek licences were being bounced onto Decipher.
My feeling was that there was a conflict of interests with all these sci-fi properties under one roof (Wizards had effectively bought up Star Wars, Star Trek and Dune, all within about 12 months of each other). On the other hand, Last Unicorn Games were seemingly locked in limbo forever trying to publish Dune on their own, so the impression given was that the Herbert estate was actually very tricky to deal with.
All that said, I would definitely pay for a Dune game - with either Traveller or RuneQuest (heck, why not both!).