Microsoft has already begun development of Internet Explorer 8.0,

One Microsoft official at CES has told ActiveWin.com that work has already begun for IE 8, the next version of Internet Explorer, and we can expect to see a final product within 18-24 months. In addition, there are reportedly no plans for an interim service pack, but rather focus completely on the next version, which will compete even more directly with Firefox.

Some of the features rumoured to be included in Internet Explorer 8.0 are,

• Full compliance to CSS specifications.
• Ability to move tabs from one IE window to another.
• A “Lock Page” functionality. This will prevent accidental navigation.
• Enhanced support for add-ons (plugins)

I think we can expect IE 8.0 release towards the end of 2008.