According to Windows Installer MVP Stefan Krueger of InstallSite:
Retirement of Visual Studio Installer Projects from future versions of Visual Studio
Candy Chiang MSFT Thursday, July 15, 2010 8:07 PM
In Visual Studio 2010, we have partnered with Flexera, makers of InstallShield, to create InstallShield Limited Edition 2010 just for Visual Studio 2010 customers. The InstallShield Limited Edition 2010 offers comparable functionality to the Visual Studio Installer projects. In addition, you can build your deployment projects using Team Foundation Server and MSBuild. For more information, see http://blogs.msdn.com/b/deployment_technologies/archive/2010/04/20/installshield-limited-edition-is-available-for-download-in-visual-studio-2010.aspx.
With InstallShield available, the Visual Studio Installer project types will not be available in future versions of Visual Studio. To preserve existing customer investments in Visual Studio Installer projects, Microsoft will continue to support the Visual Studio Installer projects feature that shipped with Visual Studio 2010 and below as per our product life-cycle strategy. For more information, see Expanded Microsoft Support Lifecycle Policy for Business & Development Products.
All I can say is: About Time!
Visual Studio Deployment Projects were horrible and contributed to a great many anti patterns including the extensive and inappropriate use of fragile Installer class custom actions. I can only hope that InstallUtil is next on the chopping block.
That said, InstallShield 2010LE alone will not fill the void 100% so I hope Microsoft also makes good on getting WiX into a future version of Visual Studio. Until then, if one is clever, there are ways of making WiX merge modules and merging them into InstallShield 2010LE projects to get IS to do things it wasn’t designed to do while following MSI best practices at the same time.