Arpan has posted a nice response to Stylus Studio petition defending Microsoft's current position with respect to XQuery.
I was personally lost when the petition used the term "XQuery developers". If my three years with the SqlXml team taught me anything, it is the knowledge that "XQuery developers" work on the same team as the Easter bunny and tooth fairy. Developers engineer solutions to problems, features like XQuery are just a tool, albeit perhaps a very important tool for some scenarios (i.e. - the Xml data type support in Yukon).