Here's an awesome demo of C-omega with Gavin Bierman of MSR UK. It shows SQL, XML, and XQuery built into a MSIL language. Very Nice! Best of all, the compiler preview is available for download and compiles down to MSIL like any other .NET language: You can write your favorite application in it if you want!
Gavin was asked whether C-omega would be making its way into the next C#. One thing to consider is that one feature, nullable types, have already made it in!
It also would be a good reason as to why MS has strategically chosen XQuery over XSLT.
Given Don Box's recent musing on “the impedance mismatch” which was previously championed by Dare Obasanjo, “The Great Convergence” does not look so far off.
By the way, this, to me, is probably the most important reason to switch to C# from VB.NET, etc. C# is a future language with international standardization muscle; the others are just legacy language reruns. Don't write new code, especially class library code, in them!