Mike Harsh is a PM on Microsoft's Windows Forms team. He answers the question: Is Windows Forms Dead?
This seems to give the clearest intent (short of a Microsoft press-release) of what will happen with Windows Forms. It is interesting since, even though it is intended to calm the community’s worries about Windows Forms, it goes further than any other article I've seen. It indicates that Windows Forms has a very limited lifetime! Furthermore the recent news that Avalon is to be retrofitted to Windows XP soon, seems to imply that the only reason to write in WinForms going forward is for Windows 2000 compatibility (or WinNT4/Win98 etc.).
I presume that we can expect Visual Studio 2005 ("Whidbey") or an upgrade release (presumably pre-"Orcas" since that is tied to the full "Longhorn" release) to include declarative (XAML) and programmatic support for Avalon in the near future.