It was announced today which features will be in version 1 of SQL Data Services, the data platform running on Microsoft’s Azure platform.

Do not confuse SQL Data Services (SDS) with SQL Server, the product you can install on your laptops and data centers. SDS is highly scalable, on-demand data storage and query processing utility services, running in the "Cloud" (Microsoft’s Data Centers)

Among the features supported are Tables, Stored Procedures, Triggers, Views, Indexes, Visual Studio Compatibility, ADO.Net Compatibility and ODBC Compatibility. Access will be via TDS, encrypted by SSL. From a development perspective, most things you can do with the SQL Server in your data center can be done with SDS.

See the SDS Product Team blogs for further information:

http://blogs.msdn.com/ssds/archive/2009/03/10/9469228.aspx
http://blogs.technet.com/dataplatforminsider/default.aspx