Well, that's what the rumours keep saying. Something about a simple, audio only (with basic, audio editing features) utility. What we know for sure is that there will be a video editing program, called MS Movie Maker.
The following is snapped from the MovieMaker help file:
"You can use Microsoft Windows Movie Maker to capture audio and video source material, which you can edit and arrange to create movies. The possibilities for creating movies are limited only by your imagination. For example, you can create movies to distribute news, provide entertainment, sell products, communicate business messages, or conduct distance learning. You can view your movies on your computer, send them to people in e-mail, or put the movies on a Web site for viewing.
The Windows Movie Maker interface is divided into three main areas:
A collections area that displays the organization of the audio and video source material you have captured. The collections area is divided into a location bar (collections tree or search bar), a clips area, and a locator bar.
A monitor on which you can preview video, a seek bar below the monitor that moves as the video plays, and monitor buttons that you can use to play and record video."