If you have an Office Live Workspace account, you will be prompted to move all your files to Windows Live SkyDrive next time you log in. Windows Live SkyDrive is Microsoft’s new online storage system and integrates with the Office Web Apps to provide a place to save and edit your Office documents online.
Next time you log in to Office Live Workspace, you’ll see an upgrade now button. This button initiates the process of transferring all your files (and references to them) to SkyDrive. Whilst the upgrade is in progress, you can still view your documents in Live Workspace but you can’t edit them.
Once the upgrade is complete, you will see a folder in SkyDrive named Office Live Documents that holds all files transferred. You can then organise these files how you want by creating new folders in SkyDrive and moving those files into them.
At this point you will no longer be able to access your Office Live Workspace. Additionally, if someone tries to open a document you’ve shared with them, they will be prompted to upgrade in order to access that document.