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Office 365 v 2011 - key technical differences?

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I'd like to hear from people that have first-hand experience in working with Office 365 on the Mac...

As of now, we're running Office 2008. We've toyed with the idea of upgrading to 2011 for various reasons, but now 365 is out. We know about the financial implications and business proposition of SaaS/subscriptions, but what we don't know are the key technical differences between 2011 and 365.

For example, if we shun the cloud for storage, what are our connectivity requirements?

Can 2008 and 365 co-exist, or is this a one-way upgrade?

etc etc.

TIA!

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