Urdu started flourishing on the internet after 2003. Initially there was a single website bbcurdu.com which was known by Urdu lovers as being a "true" Urdu website, true in the sense that it was a text based website which was built on brand new unicode UTF8 standard and which was very quick to load. After 2005 there was a boost in Urdu web publishing and we saw forums as well as blogs created in unicode Urdu. And then the trends started changing from purely inpage generated .gif images to simple but elegant text based websites which were quicker to load and which were searchable by search engines. Forums like urduweb.org/mehfil emerged which were totally in Urdu, a strange phenomenon in those days. Now a days websites like urdupoint.com use a blend of pictures and text based Urdu, where default and front page matter is in unicode while poetry and other stuff is still generated through inpage in the form of gif images.
The trends to use Unicode Standard are accelerating now and it is being enhanced by various factors. Lots of people know how to write Urdu even in notepad, how to build your personal blog in Urdu (thanks to Urduweb.org/mehfil a great Urdu Forum and mother of most Urdu Blogs), of course the spread of internet, and the factor that Urdu can be machine translated now. Paktranslations.com is online for a year or so, they are working and providing good machine translations between English and Urdu but they can never meet the experience and resources the giant of search Google has. And now google has added support of Urdu in its translate.google.com service. It is still in alpha stage but very much usable and acceptable.
Urdu is now among the 56 or so languages which are supported by Google Translate. Hindi, a step sister of Urdu, was already supported and so the case was with Arabic etc. I was just watching the progress of translate.bing.com, the Microsoft's reply to google translate. It just supports 30 or so languages yet, lagging behind a lot. Bing will have to add support for Hindi, Urdu also to prove itself. Long live Urdu, we'll see more advances in just a short span of time.
Update: Bing has an Indic Transliteration Tool also, similar to Google Transliterate. But it is still behind because it does not support Urdu as well as it does not have an API to add its support to other applications, which google transliterate services has.