when I tried to create a new SQL Server Compact file from Visual Studio -> Add New Item, I don't see the 'Local Database' option any more which was actually the way to add SQL Server Compact Database. Now, if it is really discontinued from Microsoft, then, what is the recommended Embedded Database technology from Microsoft for Desktop Applications ? I tried SQLite but deployment is headache for SQLite because, the user may not have correct version of Visual C++ distributable installed in his/her machine.
Yes, SQL Server Compact has been deprecated (see the comments on this Connect item). You should be using SQL Server Express or SQL LocalDB. Some posts:
http://blogs.msdn.com/b/sqlexpress/archive/2011/07/12/introducing-localdb-a-better-sql-express.aspx
http://erikej.blogspot.com/2011/01/comparison-of-sql-server-compact-4-and.html
http://erikej.blogspot.com/2012/07/the-state-and-near-future-of-sql-server.html