trueSpace, which has been around for 23 years is a 3D modeling tool developed by Caligari. Last year Caligari was acquired by Microsoft, and last week they released trueSpace as a free product. trueSpace is similar to SketchUp, in that, SketchUp is used to create building models for GoogleEarth and Microsoft intends users to use trueSpace to create models for Virtual Earth. trueSpace seems to be more similar to tools such as Maya then to SketchUp, which kinda intimidates me. Traditionally 3D tools have a very steep learning curve. Where-as SketchUp had extremely intuitive and easy to learn tools that made it a breeze to build models. (But it is this simplicity that also makes its feature set a lot more limited when compared to trueSpace).
Read Announcing trueSpace for Virtual Earth 3D Development, to see what features of trueSpace make it a great tool for creating models for Virtual Earth. Also check out the very cool video in that blog post, which show cases what is possible using trueSpace.
My only gripe with the tool at this point is that it does not support the Collada file format. Because if it did, then it would mean that you could create models that could be used in Google Earth, as well as import models from GoogleEarth for editing in trueSpace.