Technical note: I'm a developer, so I'm running iOS 5 beta 3. But, there feels like there shouldn't be a reason for this not to work.
Here's a clue though!
I just went into Bing Maps, and tapped "Manage Sign Ins", and "Windows Live", then "Sign Up". It throws me into Mobile Safari, and then... after numerous redirects... and ERROR PAGE. It says:
"Sorry, it looks like there was an error. Please try again."
Are you guys certain the internal pages that control logging in aren't accidentally redirecting because of the mobile browser, and sending us all to ERROR pages we can't see?
In general, there seems to be awkwardness across the board about whether you're logged in or not.
Also, the Sign Up, Privacy, and Terms links on the Windows Live sign in pop-up don't appear functional.