Scott Guthrie just posted some new information about Silverlight and the roadmap for releases. The first thing is that they are going to rebrand it as an entirely different version so Silverlight 1.1 is no more and we'll be talking about Silverlight 2.0. We'll also be seeing a beta of Silverlight 2.0 in "Q1 of 2008" That might mean MIX, but it might be sooner than MIX. They're packing a bunch of new features in (see below) so I don't know how this will impact the actual release date. We could be looking at Q3/Q4 of 2008 for a final release.
Silverlight 2.0 will actually look more like Flex. The most interesting thing is that they're going to bring more of WPF's UI framework into Silverlight. This will be stuff like extensible controls, the layout manager and data binding in addition to all of the skinning and templating that WPF has. It should make the Blend WPF/Silverlight experience a lot more seamless.
In addition, they've overhauled some of the technical aspects in Silverlight 2.0. The rich control set is aimed at giving you the ability to create actual applications and they are going to have a high level of networking support. Scott's blog says you'll be able to expect REST, POX, RSS and Web Services from Silverlight. This brings it up to par in a lot of ways with Flash on the networking side.
Expect tools to go with Visual Studio around the beta time. Regardless of whether the beta hits before or at MIX, it will be an interesting conference. Scott said there are things they aren't announcing/talking about yet so I think Silverlight 2.0 is going to be a pretty significant release.
Update: Tim Sneath has some good info about how Silverlight 2.0 will bring the UI side much closer to WPF. Worth reading.