For those who are looking for a free version of Windows and Excel this is it. Microsoft is going to be discontinuing Microsoft Works and replacing it with Office Starter. You will have to buy a new store computer to get Office Starter though. It is not totally free, you will have to deal with the adds (this is what makes it free). The adds really aren't that notice able; they sit in the lower right had corner of the screen in a preview window which cannot be closed.
With Windows Live you get most of the other offerings that normally come with Works. For those who use the data base feature in Works that will be gone (unless you keep a copy of Works around).
These will not be full blown Word and Excel. The idea behind the free offering is that once someone starts to use these applications they will find a need to move up to the full applications, hence fork out the money for something like the Home and Student Edition.
In my testing I fine that the average home user will find the Office Starter perfect for just doing letters, budget work ups, etc.
Not sure at this point when it will start showing up on new Windows Machines, albeit has more information is available I'll post back.