This morning we announced the availability of Visual Studio Team System Beta 2. You can download the bits from MSDN here. With this release we are very nearly feature complete. We expect a few more features to get turned on in the next couple months via CTPs and will do some work based on customer feedback we receive from this beta. One of the most exciting updates for the beta imho is the ability to install the TFS on a single machine, both data and middle tier (which means we've worked out w/ the SQL Server guys how to share a common version of the Whidbey runtime).
Folks on the team are very happy to have shipped beta 2 because it signifies a turning point and now all efforts are clearly pointing to driving the final quality up and getting ready to ship later this year.