Yes Neo died. He had to die for agent smith to die. As the oracal told him. Smith was his negative his oppsite. once neo died to balance things had to be balanced therefore no smith.
The movie rocked. If your looking for the back story to the whole matrix situation check out http://www.intothematrix.com/
Watch the episodes 1 and 4. I have the DVD its great. There is one episode about that kid who opens the gate and how he got out.