One of the main sticking points with many people is the lack of integration between Visual Studio Team System (VSTS) and Microsoft Project Server. Sure, you can indirectly connect the two through a MS Project file, and there’s some light integration there. But most people want to use VSTS as part of a complete lifecycle management too… and that means tracking resources across multiple projects, and many across several organizational stovepipes. That’s where MS Project Server comes in.
In the future, Microsoft will likely do a great deal of integration between the two, but for right now you’ll need to download the Project Server Visual Studio Team System Connector. I haven’t used it yet, but am planning on taking a look at it once it’s been upgraded to support either TFS RC or TFS RTM. I’ll let you know!