First, to remind you of what WinFS was meant to be (from this guardian article
The three big ideas behind WinFS were to unify storage, make it searchable, and make it accessible to applications. Unified storage meant things like songs, photos, word documents, email messages, calendars and so on could all be held in the same database. Programmers could stop developing storage systems for different applications - like the scary PST files used by Outlook - and everyone could use WinFS instead. That's why it was considered, until 2004, a pillar of Vista.
Microsoft has now given up (for now) on including this in an operating system, concentrating rather on including mature parts into databases products:
But a more likely explanation [for microsofts decision to kill WinFS] is this: Microsoft delivered a working beta of WinFS last August, and it sank like a stone. The WinFS team made a four blog posts in the first five months of this year, attracting a total of 36 comments. Microsoft also has a WinFS newsgroup on Usenet with few users. WinFS is a technology without any traction. Under the circumstances, giving it to the database guys looks like the right thing to do.
I think its sad that we'll not see this revolutionary new file system. Also makes me wonder whether this is a bad omen for the new semantic approaches to unify the storage of structured data accross the file system (such as Leo's Gnowsis or the TagFS idea).