Mysticism is a utility school, like Alteration. Now, you might play an Alteration-Illusion hybrid character (stealth-mage type character, anyone?). The true beauty of Mysticism is in Morrowind: Mark, Recall, and the Interventions. Even in Oblivion tho', Mysticism was still home to such staples as Soul Trap, Telekinesis, and Detect Life.
Anyone ever play a Mysticism focused character? Ever? EVER? Me neither. 
Actually, a Mysticism character using Absorb Health for his attacks, totally viable in Morrowind. With the added bonus that when crap goes bad, you had 3 built-in escapes: Recall, Divine Intervention (totally shouldn't have been removed in Oblivion), and Almsivi Intervention. Oo, or (as I did with my Morrowind char), you could stack the effects, consider stacking Mark with an Intervention: now you can leave the dungeon, restock, etc. and come back with a quick recall. Not to mention the access to Soul Trap such a build would afford you. (Mysticism spells were often hard to cast: because no one levelled up the skill (similarly with Conjuration, though those actually had a higher difficulty).
They removed mysticism because it is was useless and the spells fit better in other categories.
Calling Soul Trap useless is akin to calling oxygen useless.
Also, under the in-universe definitions of Mysticism, certain Mysticism effects did not fit anywhere else (the interventions, mark and recall, telekinesis (which also makes a nice argument that Levitation should have been Mysticism), and that all important soul trap you need for making precious constant effect enchantments).
They probably mixed a lot of the spell effects into Alteration (and probably put the absorbs into Restoration as IIRC they already did in Oblivion). Sadly, I wouldn't be surprised at all to find that Soul Trap has gone the way of the dodo (or more to the point, the way of the Climbing skill from Daggerfall or perhaps most accurately Levitation from Morrowind ("We can't balance that! Let's just cut it instead of being creative or coding things smarter to handle it."))
