Virtual Worlds News reports that Microsoft has acquired Caligari. TrueSpace was one of the first powerful VRML editors although it wasn't originally created for that. In fact, as someone who owns a copy of TrueSpace from those days, my main complaint was it wasn't oriented enough to the VRML language and was harder to learn than I could cope with as a newb in those days. On the other hand, one could do things with it that were exotic in the day.
Best to the TrueSpace crew as they go to work with MS Virtual Earth. It will be interesting to see how that develops. The area of service-based GIS systems with a cheap or free base layer to which the mashup vendor then adds the layers and 3D objects per application space is going to become hotter as the next generation of public safety infrastructure apps comes online. I'll be watching these guys to see how their strategies for that evolves.