Yep, the rumor is now fact.  Check out http://blogs.msdn.com/ssds/ for all the details, but the key takeaways for SDS are:

• SDS will not support all of the “traditional” database features developers have come to know and love “inside the walls”
• Tables
• Stored Procedures
• Triggers
• Views
• Indexes
• SDS will be compatible with Visual Studio and the traditional “.NET ways” of accessing data
• Support ADO.NET connection strings
• Supported inside Visual Studio
• ADO.NET compatible
• ODBC compatible

This is a really big deal as it know makes lifting an existing app and provisioning it in the cloud via Azure and SDS a lot easier. Still some things to be done to make it friction free (much of which is really design vs. code oriented IMHO) but good news none the less.