Since we shipped ADO.NET Data Services v1 in .NET 3.5 SP1 (and actually before that as well) I've been working on a few things that I could share (such as offline/sync support for data services) and some that I couldn't discuss publicly until all the big plans where announced.
This week at PDC Microsoft announced Windows Azure. A lot has been written about it, so I won't go into the details.
On our side, in the data services team, we made our small contribution to the big picture.
The Windows Azure table service is a structured storage facility that's part of the core part of Azure. Access to the table service is done through a data-services compatible RESTful interface that uses the Astoria conventions over an HTTP binding. That means that you use either any client with an HTTP stack to talk to it, or you can use the ADO.NET Data Services client, which does a nice job exposing data as .NET objects, letting you write simple queries using LINQ instead of URLs, etc.
Another cool thing about the table service (and the blobs and queuing service for that matter) is that they are accessible both from the virtual compute environment and from anywhere in the Internet. In both cases, if you're using .NET, you can use the data services client to interact with it. In the case of code running in the Windows Azure hosting environment, the client is already present (the environment includes .NET 3.5 SP1) so you can use it without worrying about taking new dependencies.
You find out more about the table service you can watch Brad's PDC session for a discussion of the service itself, and this other session than Niranjan and I did together (or "will do" if you're reading this before Wed in the PDC week) for a drill down on how to program the Windows Azure table service. If you're not at PDC no worries, these talks are accessible to online.
On the next layer up from the core, the Windows Azure service layer, SQL Data Services also is making big announcements in this PDC. We're introducing more relational capabilities into the system, and also experimenting with a data services-compatible interface. This PDC talk from Patrick will discuss and demo the new interface, and you can follow how this effort goes here.