At the last PDC, we got a lot of strong feedback along the lines of “We understand why you selected Refactoring over E&C, and we think you made the right choice, but we really want E&C anyway.”
Here's the strongest statement I can make: We're committed to getting C# Edit and Continue into the hands of our users as soon as we can, without compromising all the other commitments we've made.
For example, the development and release of Longhorn and Yukon are both tied to the progress of VS Whidbey. We don't want VS, LH, or SQL to slip, right?
E&C has tight dependencies on the CLR team. The CLR is such a critical component that we have to be very careful with what kinds of requests we make on them.
E&C is a complex feature. It will take a lot of dev work + testing, spanning several feature teams. We'll have to carefully coordinate to make this happen. The teams involved are going to have to make a very significant commitment of resources, from the best people.
There is some attention on C# E&C at the highest levels - my boss's boss's boss's boss's boss is interested. If he makes a decision about E&C, then we'll carry it out - whatever the timeline, scope, etc.
When customers ask for something so strongly, we'd be irresponsible not to respond. We're taking your feedback very seriously, and doing deep analysis to decide on the best course of action.
So what does this mean? Well, it's hard to say. We're working on finishing up the first Beta of VS Whidbey, which certainly won't include C# E&C. I hope it won't take any longer than the release after Whidbey, but that's possible, too.
Anyway, we're definitely looking at this closely, and it definitely will happen some time.