It is a hoax. The revision history of the Wikipedia article shows that it was repeatedly vandalized, corrected, and vandalized again beginning on March 14 and continuing until it was closed to further editing 24 hours later. When last I checked, the entry was correct.
I have spoken with a representative at Sinbad's production company, David & Goliath Productions, who said that Sinbad is alive and well, and any rumor to the contrary is false.
Links & Updates:
• Wikipedia: Sinbad (actor) - Vandalized entry, March 14, 2007
• Wikipedia: Sinbad (actor) - Corrected entry, March 15, 2007
• SINBAD IS NOT DEAD! - EURWeb.com, March 15, 2007
• Sinbad Alive and Well - Shecky Magazine, March 15, 2007
• Comic Sinbad Resurrected After Online Demise - Reuters, March 15, 2007
• Celebrity Gossip - About.com