Read more about it here. Among other things we will have live tiles, front and back, background processing via agents, Silverlight 4, mixed XNA and Silverlight, profiling tools, improved emulator, more sensors and sensor APIs, fast application switching, local SQL, IE9 and access to the calendar. Very exciting!
The actual download is here. You cannot install it side by side with the WP7 tools, but the new 7.1 can target both the new and old versions.