I think of making a project "inactive" as being a logical delete from the system - you no longer ever want to see that information. I tend to think that if you are ever interested in historical MI in the system, the you should not be making projects inactive, just end-dating them.
(and I believe that the application behaves like that too, in that making the project inactive causes none of the project's data to be considered anywhere else in the system - i.e. you don't have to close down allocations, ETCs and so on. From a functional point of view though, you might want to)
"Inactive" is a much more drastic thing than I think most people consider it to be.