Today Joel Spolsky wrote Please Sir May I Have a Linker? which starts as a rant on the lack of a linker in .NET but brings up some valid issues about the need for end-users to install the .NET framework. Over time, more and more users should have the framework, especially as it starts being bundled with Windows. But, Joel raises a good point about the frequency of framework updates which might require continuous updates by users.
At Palm, we faced a similar problem with Palm Desktop 4.0 which required a minimal version of Internet Explorer (we were using the browser control). Fortunately we were able to pick a very minimal version (IE 4.0 SP1) which meant that only early Win95 and Win98 systems would require an update to IE; everything since then has at least version 4.0 installed.
Joel gives the example of a simple program that gives an indecipherable error message when launched on a machine without .NET. In a more typical scenario, you would probably deliver the application with an installer that could detect whether the .NET components were installed and alert the user in a clear way if not.
It does look like Microsoft will allow developers to redistribute the framework, but at 27MB you would probably only do that for an internal project. For internet-based downloads, I suspect most developers will not bundle the framework, relying on end users to update from Microsoft directly. I suppose this is similar to the previous incarnations which needed Visual Basic or MFC DLLs to be distributed, although they certainly weren't as large as .NET.