In March, Microsoft offered an optional update that updates users to Windows Live Essentials 2011. As of June 14, this update will be required for all Windows Live Essentials users.

Canceling the update request will prevent the customer login.

When Windows Live Essentials 2009 customers go through this update, they will be migrated to Windows Live Essentials 2011.
Mandatory Update to Windows Live Essentials is now available - Microsoft Answers