The Windows Live Custom Domains team just launched version 2.0 featuring the new Wave 2 UI and a bunch of new features.
According to their team blog the highlights of this release are:
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E-Mail optional domains: Your can now register a domain to host Windows Live IDs without the need to change the email provider still allowing for Windows Live Messenger use
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Custom Adresses: You can now set up friendly names under your domain (eg. mail.liveside.net) that point to the Windows Live service
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The default member limit has been raised to 500 (it was previously at 100) and can still be extended by request
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An updated SDK with twice the number of methods and richer sample apps
Go and give Custom Domains a test run.....