XAML is not Avalon and Avalon is not XAML. I think we've not been making this entirely clear although it has definitely been implied by Don Box, Chris Anderson and others. See the Holiday MSDN TV show to see some of this.
However there seems to be a little confusion here as seen in Dino's unprogramming post so I'll say it again.

XAML is not Avalon and Avalon is not XAML. Avalon is the codename for the new presentation subsystem in Longhorn while XAML is markup for .NET objects. While I don't want to downplay the importance of XAML I do think it's important to understand that anything you can do in XAML can also be done in C#, VB.NET or any .NET language of your choice. That doesn't meant that XAML and Avalon aren't extremely useful together. Take a look at Rob Relyea's blog for the work going on with XAML at the moment, it's Rob's job to ensure that XAML has a syntax to give it great exploitation of Avalon's capabilities. Rob will probably have a word with me for downplaying the importance of XAML next time I see him :-)

So why do I think it's so important to understand that XAML is not the same as Avalon? Well I think that if you are going to understand the full impact that Longhorn is likely to have on the industry then you need to understand all the key areas of Longhorn - Fundamentals, Indigo, WinFS and Avalon. If you think of Avalon as simply XAML it is easy to get distracted by the markup syntax and not see the capabilities provided by the API set around integrated data binding, animation, compositing etc. etc. etc. And when you are focused on the syntax of markup and not the capabilities of the platform it is difficult to see the overall platform.

I hope the Avalon team will continue to talk to me after I say this but I don't actually think Avalon is all that interesting unless you combine it with the capabilities of Indigo and WinFS. Only when you can communicate reliably and securely using Indigo and can find related data quickly and easily using WinFS does the new presentation system in Avalon become really useful. It is the combination of all these abilities in Longhorn that I believe will enable new types of solutions and new types of software and that is my dream for Longhorn - to see people create solutions and software that they only dreamed of before!

Don't get me wrong though I think XAML is super useful and I'll post some ramblings on that shortly.