While Microsoft had never really announced a ship date for Expression, it was fairly well known that they expected it to ship this year. They are still tip-toeing around the timeframe, but in slides shown at the conference, the date now seems to be 2007/2008. That is an awfully long time and it gives Adobe a big head start.
I've always felt that WPF competes more with Adobe's Apollo than with Flex 2, but there is no denying that the two technologies are aiming for generally the same audience. Microsoft comes in with a stronger developer community, but Adobe comes with a stronger design community. RIAs are the blending of both, so it behooves companies to get a high quality product out as soon as possible.
This is going to cost Microsoft in the long run. I realize that there will be people who always use Microsoft products, and who are already building applications in WPF, but I have to wonder if some of those people who have gotten excited about RIAs through Microsoft now find themselves looking at other options to deploy the applications they've put so much time in.