The New York Times sums up the situation:
An episode of “South Park” that continued a story line involving the Prophet Muhammad was shown Wednesday night on Comedy Central with audio bleeps and image blocks reading “CENSORED” after a Muslim group warned the show’s creators that they could face violence for depicting that holy Islamic prophet. Revolution Muslim, a group based in New York, wrote on its Web site that the “South Park” creators Matt Stone and Trey Parker “will probably wind up like Theo Van Gogh” for an episode shown last week in which a character said to be the Prophet Muhammad was seen wearing a bear costume. Mr. Van Gogh was slain in Amsterdam in 2004 after making a film that discussed the abuse of Muslim women in some Islamic societies.
Stone and Parker had added more bleeps to the followup episode, but it seems Comedy Central went further and completely blocked the name of the character and his depiction onscreen. So there you have it. Clear advice for anybody who’s pissed about anything they see on TV. All it takes to get a network to cave to your extremist demands is to threaten violence. Great precedent to set, isn’t it?
I've never been an outright fan of South Park, aside from the hilarious movie. The show never really did anything for me-- I'd laugh for a second or two and the whole thing would be disposable and forgotten moments later, but I applaud the crew for making a show that still has the power to offend and mortify anybody and everybody. Which is the main conceit, right? It's about fourth graderers, who are by nature sneaky, immature, foul-mouthed brats-- how can that be offensive?