I think it indicates a tighter integration on the horizon between Spaces and the rest of Windows Live. I've said for a long time that Spaces is like the red-headed stepchild of WL. It's themes and tools are way out of step with other facets of the service, fail to measure up to real professional calibur blogging services, and frankly most people's Spaces look like a train wreck.

Spaces was really the first element of what we today call WL, and it's been pulled apart piecemeal into other areas of the service. For instance, Photos is now part of SkyDrive, Favorite Things are now (sort of) housed under Profile, and Spaces "friends" have now been integrated into People.

IMO, it's time for the "blog" (which, contrary to most people's opinion, is not equivalent to your "space" - your space is the entire set of pages that currently house your dashboard/modules page, blog, and lists) to come out of Spaces and relocate just off of your Profile. Same goes for all Spaces lists. Then, they need to give you the ability to personalize the URL of your Profile page, and make your "space" accessible via some kind of link from the Profile page. If you want to keep a space and make your blog accessible there, then you'd still have a module that could do that. That arrangement would make a lot more sense to me (and probably alot of other people).

And while they're at it, they need to punch up the post tagging capabilities, including support for multiple categories per blog post, and provide WordPress-style theming tools that can be fully customized.

I'm not saying do away with Spaces altogether, but I shouldn't have to maintain an entire "space" full of widgets, just 'cause I want a Live-powered blog.