I'm not sure if anyone talked about this before but I'm quite certain that he's still alive.
Proof : http://www.mangafox.com/manga/one_piece/v58/c589/7.html
I believe that Dragon went back to the town because he's worried about something and found Sabo half dead, and decided to bring him back with him.
One of another reason why I believe that Sabo is still alive is because they didn't found his body, they only saw that he's been shot at.
I believe that Sabo has been training beside Dragon and is quite strong now.
I don't think that he will join Luffy, I think he will stay with the Revolutionary Army, fighting for people who wants freedom.
Any comments and/or suggestions are welcomed !
(Sorry guys, just realized that there's another thread about this.)