psycadelik has updated his terrain editor for the XNA.:

Create or modify heightmaps and color distribution maps.

Rise, lower, flatten or smooth the terrain.
Generate a random terrain.
Paint textures on your terrain.
Day-Night lighting cycle.
Import/Export heightmaps and colormaps
Save/Load Terrain xml files

and more..

(Updated for XNA 2.0)

http://psycad007.spaces.live.com/