Whelp, Microsoft finally gave it the official name
 

Windows Vista™
It is on the front page. Beta testing will start Aug 3rd. I will be sure to try it out, if my gfx card is able to handle it :p

what does it do?

Turns your PC into an XboX

You say it like it is a bad thing :p

It is the new Windows OS that was previously known as longhorn. It is supposed to eliminate the need for video drivers, amongst other things. Basically, it is a completely recoded 3D version of Windows. For example, you can have 3d objects floating around in the background of your desktop. A while ago, MS showed images of the desktop being rendered to a texture and it appeared on the side of a cube.

Oh yah, and the way it stores files is also different. I am not sure if it was either linux (i am not familiar with it), or gmail that has a similar method.

But, it is supposed to load applications much faster. The OS itself is supposed to be "faster":

-boot PCs 50 percent faster than they boot currently and will allow PCs to resume from standby in two seconds
-allow users to patch systems with 50 percent fewer reboots required
-reduce the number of system images required by 50 percent
-enable companies to migrate users 75 percent faster than they can with existing versions of Windows.

also avoid installations, a supposedly automated gaming system right?