This reminds me of the "old" joke:
Q: What's the difference between a Google Beta and Microsoft Beta?
A: The Google one works.
Seriously, Microsoft Office Live Workspace Beta is NOT ready for prime time. It breaks left and right, and documents saved using the Office Add-In do not show up on the site, and vice versa. It's not at all clear how/where documents and notes are published to the world (or selected editors), it appears shared notes have gorgeous urls such as http://workspace.office.live.com/#jACRjODAxNTgyNC02ZGU5LTQ2 ZWEtOTM2NC1kNWRkYmZiYzMwZWIAexNNcSrC4klMmPClqr_ axD99e9iDDuoAk1lAgpXOMHVa0Gh9... Say that 10 times fast...
That said, it is an intriguing offering. TechCrunch claims it's a free public offering of SharePoint, but besides being Office related I have a hard time seeing any similarity to SharePoint. Maybe MS uses SharePoint on the back-end, but the UX is completely different from any Sharepoint install I've ever seen or used. The functionality is also trimmed down to a minute fraction of even WSS (which is also free, but you have to host it yourself, on Windows 2003 (or 2008) which of course is NOT free).
Though I'm not tempted to participate, it will be interesting to watch.