Somehow I missed this announcement, but I was really excited to see that Microsoft has acquired Caligari. Caligari produce the much-respected TrueSpace 3D product that lines up against Maya, 3D Studio Max, Cinema 4D and others. They also produce GameSpace for 3D developers eg Darkbasic developers.
They are joining the Virtual Earth team, as explained by CEO Roman Ormandy in this forum post. I won't conjecture what that actually implies in terms of Virtual Earth and 3D moving forward, but it certainly shows that VE is an area that is seeing real investment.