Steve Kafka of the Windows Live mail team has a blog post entry on their team blog entitled M5 is alive! where he talks about some of the new features. Some of my favorites include

Hotmail Classic View
OK, I know it's a contradiction to name anything with the name “classic” as NEW.  But it is.  We know our customers roam….and that they don't always log in to Windows Live Mail on computers with IE (and many times they aren’t even logging in from a computer at all).  We want to help make sure you guys can get your mail any time you need.  Now for people not using Internet Explorer 6.0 and higher, we have a new view of WL Mail, what we're calling the Hotmail Classic View.
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Offline Mail and other good stuff
Announcing Windows Live Mail Desktop Beta!  The next generation of desktop mail is coming.  Check out the team blog for all the details.
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Configurable reading pane
Did you know that you can turn the reading pane off?  That's ok, no one else did either.  Now you can configure the reading pane while reading your mail.  No hunting through options, you can change it on the fly.  Even better, we've added an option: the bottom reading pane!  Now you can chose between having the reading pane on the right, bottom, or off.  You pick.  Change it whenever you like.
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Outlook-like shortcuts
You can now use the shortcuts menu in the left hand navigation to switch between Mail, Contacts, Calendar and the Today page.  Need more space? Minimize the shortcuts to give yourself the maximum amount of room to view your mail.
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Contact picker
I know auto-complete is awesome.  Start typing a name and we complete the address for you. It's perfect for writing a mail to one or two people.  But admit it, sometimes you just want to browse.  You want to peruse your contact list and choose your contacts and groups.  With contact picker you can browse your contacts and groups while composing a mail and choose which addresses you want to add.
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Find in contacts
If your contact list is bigger than 20 people, you're probably tired of scrolling through the list looking for the right contact.  Well, hunt no longer. Find in Contacts will actually word wheel through your contact list as you type.  For those of you lucky enough to be on the Windows Live Messenger beta, this will probably look familiar.  Select the contact you are looking for and you'll jump right to that contact. Your contact management just got a whole lot easier.
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Spaces integration
Those cool contact cards aren't just for Messenger anymore.  The "contact control" now pulls in the profile picture for your contacts. You can view their contact card, jump to their Space or profile and more. This feature won’t be ready immediately when M5 is released but we were too excited to keep it a secret.
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Custom filters
While Windows Live Mail continues to use the custom filters you set up in Hotmail, there hasn't been any way to edit the old rules or create new one.  And boy did our beta testers miss it. Until now.  Custom filters are back, allowing you to have mail sent directly to a folder of your choosing based on the criteria you select.

This release is hot. I finally had to get a Windows Live Mail beta invite for my girlfriend. She likes it, I do too.