Mozilla Prism

Here is another thing that's going to blur the borders between the desktop and the web.
Mozilla is working on Prism which is a platform for development of web enabled desktop applications.
This is a trend - you can find similar platforms for doing this, for example: Adobe AIR.

There is of course the other direction - bringing the desktop to the web (g.ho.st is a nice example).
My personal opinion is that although this is definitely cool - it is not something people will actually use in the near future. Especially stupid is the browser inside a browser these virtual desktops have.