The new XML Developer Center on MSDN has a nice article about the new XML features in Whidbey.  The top 10 list is:

  1. Performance
  2. XPathEditableNavigator, an Updatable Cursor
  3. The XPathDocument as a Better DOM
  4. Easier XPath Queries with Namespaces
  5. Security
  6. The XQuery Language
  7. XmlReader and XmlWriter Usability
  8. Universal Type Support and Conversion
  9. XML Standards Support by Default
  10. Static Creation Methods on XmlReader and XmlWriter