Currently in CTP, The SQL Server 2005 - Everywhere Edition is a compact database(5MB memory footprint, approx 2 MB!! disk footprint)
which is free to download develop and deploy*

Features are impressive
• Full referential integrity with cascading deletes and updates
• Multiple connections for foreground and background operations
• Single data file with password protection and 128-bit file level encryption
• Transaction support to commit and rollback grouped changes
• A wide range of data-types, such as UNICODE character data types, IMAGE, MONEY, and IDENTITY
• Supports database size up to 4 gigabytes
• SET Functions (aggregates), INNER and OUTER JOIN, subselect, and GROUP BY and HAVING clauses
• Scrollable and updatable cursors to provide fast and easy data access

Find out differences between SQL Server 2005 Everyehere Edition and Express Edition (and more) here.