reduced privilege mode becomes the default;
no cross-domain scripting and/or scripting access;
improved Secure Sockets Layer (SSL) user interface;
possible integration between IE 7.0 and Microsoft's Windows anti-spyware service, which currently is in beta;
will be a tabbed browser;
will feature international domain name (IDN) support;
transparent Portable Network Graphics (PNG) support, which will allow for the display of overlayed images in the browser;
new functionality that will simplify printing from inside IE 7.0;
include a built-in news aggregator;
Internet Explorer 7.0 won't run just on Windows XP Service Pack 2. It also will work on follow-ons to SP2, which include Windows XP Professional x64 and Windows Server 2003 Service Pack 1. Still no word on whether the updated version of Microsoft's browser will run on older versions of Windows, too (specifically Windows 2000);
still won't provide full-fledged support for the Cascading Style Sheets 2 Web standard. Microsoft will add some additional CSS2 support to its new standalone browser, but not planning to go the whole way and make IE 7.0 fully CSS2 compliant. Microsoft considers CSS2 to be a "flawed" standard and that the company is waiting for a later point release, such as CSS2.1 or CSS3, before throwing its complete support behind it;
anti-phishing technology;
will also include an IP traffic encryption capability that will help prevent electronic eavesdroppers from modifying data before it reaches your machine or redirecting you silently to malicious servers;
I'll post when I can find more information.