Well, the internal debate over whether to deliver a Windows Server update in the Longhorn timeframe is apparently over. According to sources in and close to Microsoft, the software giant is now working on a version of Longhorn Server that will succeed Windows Server 2003 and precede Blackcomb. Longhorn Server will provide customers with the important core technologies from Longhorn, including a .NET-based user interface and graphics library called Avalon, a SQL Server "Yukon"-based file system add-on called Windows Future Storage (WinFS), and low-level anti-virus APIs, among other features. Currently, Longhorn Server is still considered a minor update, however, and not a major update like Blackcomb.
News source: wininformant.com