The April 15, 2008 edition of SDTimes (PDF download here) has some information about SSDS, the SQL Server in the cloud that was announced not long ago (and still in private beta). I'll mention a couple points here, but worth reading the article!
Says that it doesn't use the same entity model as SQL Server
Developers must use LINQ to access the data!
An analyst in the article notes that "SQL Server is for more experienced DBA's".
Cloud computing is damned interesting. I've lived in the real SQL Server/database world for too long to want to use a light weight engine, but I can understand why many would. I'm starting to think that we need to training all deveopers to be mini DBA's. They see the power and possibility of LINQ, Silverlight, etc, etc, what is about SQL Server that they don't like?