F# is a highly influential language from Microsoft Research. It is based on the ML family of languages, but also incorporates concepts from C#, LINQ, and Haskell. Running on the CLR, it can leverage any .NET library.
According to Somasegar, "[Microsoft's developer division] will be partnering with Don Syme and others in Microsoft Research to fully integrate the F# language into Visual Studio and continue innovating and evolving F#." This means F# will be treated as a first-class language on the .NET platform.
This isn't the first time Microsoft has introduced a language other than the big three, Managed C++, C#, and Visual Basic, to the .NET platform. J#, a clone of Java 1.1, and JScript.NET had compilers but limited or no Visual Studio support. More recently, IronPython and IronRuby compilers were added as open source projects. What makes F# unusual is that it is the first language to be based primarily on Functional Programming rather than some form of Object Oriented Programming. The last non-OOP language from Microsoft, aside from T-SQL, is the venerable xBase language, FoxPro.
No timeline has been set for this initial release, but it most likely will not be with Visual Studio 2008.