Microsoft just release its Windows Azure SDK 1.2.  This is a key release, including among other features:

• Visual Studio 2010 RTM Support: Full support for Visual Studio 2010 RTM.
• .NET 4 support: Choose to build services targeting either the .NET 3.5 or .NET 4 framework.
• Cloud storage explorer: Displays a read-only view of Windows Azure tables and blob containers through Server Explorer.
• Integrated deployment: Deploy services directly from Visual Studio by selecting ‘Publish’ from Solution Explorer.
• Service monitoring: Keep track of the state of your services through the ‘compute’ node in Server Explorer.
• IntelliTrace support for services running in the cloud: Adds support for debugging services in the cloud by using the Visual Studio 2010 IntelliTrace feature. This is enabled by using the deployment feature, and logs are retrieved through Server Explorer. Note: Requires Visual Studio Ultimate and .NET 4 roles.
• A lot of bugs in SDK 1.1 and .NET 3.5 ADO.NET Data Services.

Supports for .NET 4.0 is now available in the cloud, only a few months after being available on premise.  To me, this indicates Microsoft weight really is behind the Windows Azure platform.