When we started building the project management features of Visual Studio Team System, we had a lot of pieces to work with, but they didn't fit together very well. 

The Team Foundation provides a Work Item Database.  It's a significantly enhanced version of the internal tool we use at Microsoft to track bugs in the product.  We've extended it by generalizing it to support any kind of work item you can describe - requirements, tasks, issues, scenarios, features, etc.  We've also pulled it into the VS environment so you can query for a collection of work items you care about, edit them, attach additional information to them, hand them to other people on your team, etc.

We also saw that MS Project is great at manipulating collections of tasks, tracking dependencies, and building out work plans.  But when you've built the project file, it's challenging to get everyone on your team to read it and it's hard to keep it current as people actually complete their tasks. 

We saw the opportunity to integrate these two pieces and make a better solution for everyone.  If you have both VS Team System and MS Project Professional, you can build a query to assemble a list of work items of interest (usually tasks, but it could be other things).  The results of that query can then be loaded into MS Project so you can load balance the team, edit the individual tasks to assign out to team members, calculate start and finish dates, reorganize to your heart's content and then publish.  When you publish, all the edited tasks are brought back into the VS Team System database.  Now, other team members can see their assignments, even if they stay in the IDE all the time (like good developers should :-) )

And we can track changes.  As developers, testers and other team members complete work, they can update their work items from the IDE (or through Sharepoint).  The project manager can open her project file and with a resynch, she gathers all the updates to the work items she's tracking.

It's a very powerful mechanism to keep projects and teams in synch with each other.  As we roll out pre-alpha, we look forward to seeing how you all will use it to co-ordinate and communicate your project plans to the team.