Mesh was fantastic. I don't understand why they dropped it. They had big plans for it too, such as putting it in the car.
I tried to get my Dad using Skydrive (he's a big Apple fan) and he was immediately turned off that he couldn't drag folders of photos into the Photos folder on Skydrive.
Microsoft has great ideas, but they seem to never get them 100% right, whereas Apple has good ideas but always get them 100% right. All they needed to do was take Live Mesh and put the storage on Skydrive. Instead they took a mediocre Live Sync and added a smattering of Mesh features to it.