As Kip already mentioned, tomorrow we’ll hear a lot more about Live Mesh at PDC. Today the keynote was all about Windows Azure, a Services Platform for the cloud. But how does Live Mesh relate to Azure? The Live Mesh Blog explains:

In his PDC keynote just now, Ray Ozzie announced the Azure Services Platform.  Here's the overview picture:

The Live Services box at left is home to the developer services and APIs that power the Live Mesh platform experience.  Think of it this way -- Live Services provide the infrastructure, Live Mesh is a software + services experience/app built on top of those services.

So in short: Windows Azure is the base on which all is build! The bottom layer of the cake, the foundation.

I sure am looking forward to the Keynote tomorrow, which you can follow again Live at the PDC Website. Speaking of which, have you noticed the Silverlight Photo Wall? All Pictures tagged PDC2008 on Flickr and Facebook will end up there, well worth a look! And of course, just like today, Kip will be Live Blogging the Keynote again along with Ed Bott, Mary Jo Foley, Rafael Rivera, Paul Thurrott, Tom Warren and Long Zheng.

PressPass: Microsoft Unveils Windows Azure at Professional Developers Conference (includes video of the Keynote)
Edit: PressPass: Windows Azure and the Azure Services Platform: Making Microsoft’s Software-plus-Services Vision a Reality

Live Mesh
Live Mesh Blog
Live Mesh Forums 

Liveblogging the keynote: Part one