When they first claimed DX10 support with G965 and GM965, they were having problems delivering on the promise.
True. I bought a laptop with GM965 about 3 years ago, with Vista installed.
But the drivers only supported DX9 at first, and things like hardware T&L/vertex shading were also disabled mostly.
I was surprised by that, as I thought that originally the part was introduced as a DX10 part.
Many months later, I happened to find a beta driver which finally enabled DX10. It sort of worked, although certain DX SDK samples for DX10 had rendering issues.
As even more months passed, Intel finally launched an official DX10 driver.
But even today, my GM965 still cannot run all the DX10 examples of the DX SDK. Some of the rendering issues have been fixed, but some stuff just crashes still.
It also does DX11 by the way (in DX10 downlevel mode). But neither DX10 nor DX11 perform anywhere near as well as the same code in DX9.
G965 isn't the same as the GM965, and has never received DX10 support. G965 shares some architectural features with GM965, but either some of it was bugged and fixed in GM965, or G965 was never meant as a full DX10 part.
So in short: Intel has had a lot of problems getting DX10 to work, and it still isn't quite 100%. However, it seems that it was pretty much all on the driver side.
It could be that they now have hardware that is capable of DX11, but they again need a lot of time to get the drivers to support it. Or perhaps they'll run into hardware bugs along the way, and have to stick to DX10.1 support. So they may not want to get ahead of themselves here.