What used to be called Silverlight 1.1 has been rebranded as Silverlight 2.0 and will include a cross-platform, cross-browser version of the .NET Framework and will enable a rich .NET development platform in the browser. Scott Guthrie has a post that details what will be part of the 2.0 release, but it includes:
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WPF UI Framework: The current Silverlight Alpha release only includes basic controls support and a managed API for UI drawing. The next public Silverlight preview will add support for the higher level features of the WPF UI framework. These include: the extensible control framework model, layout manager support, two-way data-binding support, and control template and skinning support. The WPF UI Framework features in Silverlight will be a compatible subset of the WPF UI Framework features in last week's .NET Framework 3.5 release.
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Rich Controls: Silverlight will deliver a rich set of controls that make building Rich Internet Applications much easier. The next Silverlight preview release will add support for core form controls (textbox, checkbox, radiobutton, etc), built-in layout management controls (StackPanel, Grid, etc), common functionality controls (TabControl, Slider, ScrollViewer, ProgressBar, etc) and data manipulation controls (DataGrid, etc).
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Rich Networking Support: Silverlight will deliver rich networking support. The next Silverlight preview release will add support for REST, POX, RSS, and WS* communication. It will also add support for cross domain network access (so that Silverlight clients can access resources and data from any trusted source on the web).
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Rich Base Class Library Support: Silverlight will include a rich .NET base class library of functionality (collections, IO, generics, threading, globalization, XML, local storage, etc). The next Silverlight preview release will also add built-in support for LINQ to XML and richer HTML DOM API integration.