Microsoft recently released the new Windows Live Movie Maker, a free video editing software with lot more features. This has been released as a part of an update to Windows Live Essentials.
The interface has undergone a major change. Customizing your movie is simple with easy-to-use editing tools. Trim your video clips to show only the parts you want. Add titles, transitions, music, and effects like panning and zooming.
The new Windows Live Movie Maker is not compatible for XP; only for Vista and 7.
Here is an introduction video for Windows Live Movie Maker