http://www.zdnet.com/blog/microsoft/microsoft-drops-dryad-puts-its-big-data-bets-on-hadoop/11226
As far as I understand, both are Map-Reduce implementations, one written in Java, and is open source, and the other is Microsoft proprietary.
No, Dryad is not a MR implementation at all. It is a far more general graph-based distributed computation platform which happens to also be able to do MR, but it's much more flexible than that.
Dryad is written in C++, but one of the (several) ways to write programs for it was DryadLINQ, a LINQ provider that converts LINQ expressions into distributed programs and executes them on Dryad. It was an incredibly powerful approach that puts similar initiatives like Pig and Hive for Hadoop to shame.
Dryad itself used Microsoft Cosmos as the underlying execution engine, which I believe is used extensively inside MS. I severely doubt they are abandoning that in favour of Hadoop (which is often very inefficient and currently doesn't run very well on Windows). They may be abandoning Dryad as an offering for third parties to use, I could definitely believe that.
Add your 2¢