Microsoft has been beta testing SP1 since December of last year.  Today, it was released to MSDN subscribers and will be available for public download on March 10, 2011.

The service pack includes a slew of fixes, and a number of new features:

• Silverlight 4 support
• Basic Unit Testing support for the .NET Framework 3.5
• Performance Wizard for Silverlight
• IntelliTrace for 64-bit and SharePoint
• IIS Express support
• SQL CE 4 support
• Razor support
• HTML5 and CSS3 support (IntelliSense and validation)
• WCF RIA Services V1 SP1 included
• Visual Basic Runtime embedding
• ALM Improvements 

Of all the improvements, IIS Express probably has the largest impact on web developer productivity. 

According to Scott Gu, it provides the following:

• It’s lightweight and easy to install (less than 10Mb download and a super quick install)
• It does not require an administrator account to run/debug applications from Visual Studio
• It enables a full web-server feature set – including SSL, URL Rewrite, Media Support, and all other IIS 7.x modules
• It supports and enables the same extensibility model and web.config file settings that IIS 7.x support
• It can be installed side-by-side with the full IIS web server as well as the ASP.NET Development Server (they do not conflict at all)
• It works on Windows XP and higher operating systems – giving you a full IIS 7.x developer feature-set on all OS platforms

IIS Express (like the ASP.NET Development Server) can be quickly launched to run a site from a directory on disk.  It does not require any registration/configuration steps. This makes it really easy to launch and run for development scenarios.

Good stuff indeed.  This will make our lives much easier.  Thanks Microsoft...we're feeling the love!