Today at the Professional Developer's Conference (PDP), Microsoft presented the new Microsoft Expression Suite. The new software package includes three programs along with extensions for Visual Studio 2005:
More details can be read at NeoWin or at Microsoft's website.
Acrylic. This has been in beta but based on how it was demoed isn't so much of a Photoshop competitor but rather as a focused designer tool for software and web development. Sparkle. A visual design tool that lets designers create interfaces without having to write any code. Quartz. A web-oriented tool for more easily taking rich content and putting them on the web.