(No, that's not a whale reference...)
Today we released a fresh CTP of the next release of Visual Studio (codenamed "Orcas" - it's one of the San Juan islands that are a bit further out from Redmond than Whidbey Island...). I wouldn't normally take the time to note this third or fourth CTP release, except for the fact that this is the first release that has WPF tools support baked into it (yay!).
"Orcas" has a ton of new features for WPF development over the releases that we shipped as extensions for Visual Studio 2005. It's got true WYSIWYG support for XAML code edits, it's got the new Property Editor checked in (shared with Expression Blend), it has far better Intellisense support for XAML, and it's much better for layout.
I haven't used this new build for long enough to judge stability, so I can't put my hand on my heart and say that you should switch to this as your WPF development tool of choice. There's still a place for Expression Blend as part of a developer's toolkit, since "Orcas" won't contain in-depth support for animation or templates, but the combination of the two should give anyone a good toolset for constructing awe-inspiring WPF applications.
The "Orcas" CTP is shipped as a Virtual PC image - download Virtual PC 2007 from here.