Microsoft have announced the XNA Game Studio Express beta. Based on Visual C# Express 2005, this tool will enable creation of Windows and Xbox 360 games using the XNA Framework.
This is an exciting development for all hobbyist game developers! I'm hoping that there will be a community web site where developers can connect, share knowledge and showcase their work.
The tool is free but, to create/debug games on the Xbox 360, you will need to buy an XNA "Creators' Club" subscription for $99/year. The FAQ seems to say that only Windows will be supported until later this year. It appears that in the future, you will be able to share your Xbox 360 binaries with other users - in the beta you can distribute your source/assets to someone that also has XNA Studio Express.
No support for Xbox Live or Windows Mobile/Pocket PC.
Managed DirectX 1.1 remains supported but with no new functionality. The XNA Framework will effectively replace Managed DirectX 2.0. There will be guidance provided to help migrate MDX 1.1 code to XNA.
Go to http://msdn.microsoft.com/directx/xna/ for more information!