Cancelled orders can be hidden from the dashboard by adding a filter to hide them. Simple click on the Status filter, as shown in the screen shot below.
At the very bottom, there is an option that says Hide Cancelled Orders. Check this, and your orders will update to reflect the changes.
Remember, your account will remember these filters, so if you ever want to change them, just click Reset Filters on the right hand side to show everything, or simple uncheck the 'Hide Cancelled Orders' option.