Yes, people still do.  I don't know about them online, but you can get them at any US Post office, obviously.  I used to use them all time for eBay orders, though that was over 10 years ago and I don't know what they cost now.

Good to note that there are other companies besides the USPS that offer money orders for the US (and some for Canada).  Western Union can do them (as well as money wires) and the 7-11 Convenience Store chain does them, though you can only cash them in at another 7-11 store (or Western Union office for WU Money Orders).

People still use money orders in the 'States a lot because USPS Money orders are one of the only forms of payment accepted for a lot of government transactions, too, the other being a Certified Bank Check/Cheque.  For example, getting your US Passport requires you send the payment in either a USPS Money order or Certified check (no cash or personal checks are accepted for that).