Visual Studio 2008

Released: November 2007
Office Developer Tools only included in the professional edition
Includes a number of design helpers.
Interoperability between VBA and VSTO
Data binding for Word content controls
Inclusion list used for VSTO installs, not .NET security
VSTO document installs are stored in ClickOnce cache, not Internet Explorer cache
Document Level 2007 - Excel, Word (v3 runtime) (will not run in 2003)
Document Level 2003 - Excel, Word (v2 runtime)
Application Level 2007 - Excel, Word, PowerPoint, Outlook, Visio, Project, InfoPath (v3 runtime)
Application Level 2003 - Excel, Word, PowerPoint, Outlook, Visio (v2 runtime)
Ribbon Extensions 2007 - Visual editing of Excel, Word, PowerPoint, Outlook ribbon
Outlook Form Regions 2007 - Outlook
SharePoint - Design time support for SharePoint 3.0 workflow

Update 1 (Released: August 2008)
Smaller .NET framework client profile to reduce time taken to install
Office 2007 PIAs included by default
You can use the Event Viewer to troubleshoot installation problems