The speculation on LiveSide was right. Windows Live Folders is now Windows Live SkyDrive. You can catch the announcement on the product team's blog post Introducing Windows Live SkyDrive! which states

It’s been a month and a half since our first release, and today we’re making three major announcements!

First, we’re happy to announce our new name:

Second, we’ve been listening intently to your feedback and suggestions, and based directly on that feedback, we’re excited to bring you our next release, featuring:

  • An upgraded look and feel — new graphics to go along with your new features!
  • "Also on SkyDrive" — easily get back to the SkyDrives you’ve recently visited
  • Thumbnail images — we heard you loud and clear, and now you can see thumbnails of your image files
  • Drag and drop your files — sick of our five-at-a-time upload limit? Drag and drop your files right onto your SkyDrive
  • Embed your stuff anywhere — with just a few clicks, post your files and folders anywhere you can post html

Third, we’re excited to introduce SkyDrive in two additional regions: UK and India.

It's great to see this getting out to the general public. It's been pretty sweet watching this come together over the past year. I worked on some of the storage and permissioning platform aspects of this last year and I was quite impressed by a lot of the former members of the Microsoft Max who are now working on this product.

We definitely have a winner here.  Check it out.

UPDATE: Someone asked for a video or screencast of the site in action. There's one on the Window's Vista team blog. It is embedded below

Demo: Windows Live SkyDrive

Now playing: 50 Cent - Outta Control (remix) (feat. Mobb Deep)