The main element to the update is the addition of finger print technology. Tried by other hardware makers, the technology hasn't really had much attention asides from high-end, security critical systems; with backing from a big player (the player?) the technology could go mainstream. Microsoft are integrating the technology into their hardware and software solutions, allowing users to give prints rather than passwords. A good move, increasing security and decreasing hassle for end users, as well as being pretty cool. No doubt, a popular addition to the hardware line. You can get the reader as a stand alone device (see screenshots below), or on an Optical Desktop with Fingerprint Reader, or finally on a Wireless IntelliMouse Explorer with Fingerprint Reader.These new models will be available in 2005.
More info about the products, prices and photos can be found at Neowin