This probably won't come as a major surprise: MSDE won't be supported on Windows Vista or "Longhorn" Server.

What is MSDE? It's a free version of SQL Server that's been around for years. While it's a useful product - and I certainly made use of it a number of times in the past - it was always going to be at risk once we announced SQL Server 2005 Express. Why have two free versions of SQL Server after all, and if you're going to pick one you might as well pick the latest version.

SQL Server 2005 Express is a superior product in just about every way, take a look at this link for more details on why and other useful info re how to upgrade:

And you might ask if there's anything that MSDE does that SQL Server 2005 Express can't handle? Well, not much, but DTS changed in the SQL Server 2005 family so if you need to use DTS you'll need to get the DTS 2000 runtime (available as part of the SQL Server 2005 Backwards Compatibility components in the SQL Server 2005 Feature Pack).

And SQL Agent in MSDE has been replaced by technologies such as SQL Server Broker, Windows Task Scheduler and Windows Sychronisation Manager.

All-in-all nobody should be particularly suprised by this news. A few links that might be useful: