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Some time ago, Microsoft acquired Caligari, creators of Caligari trueSpace, an 3D modelling tool. Perhaps not as known as 3D Studio Max or Maya, it's a very rich tool to create 3D spaces and models with.
I remember playing with trueSpace for the first time, many years ago (I think it was version 2 or 3) that I got free with a PCPlus magazine. Since then of course, the tool has matured and expanded quite a lot (quite logical).
And now, the really good news (and the reason I'm blogging about this...): a few days back, Microsoft made trueSpace 7.6 available for free AND it offers connection into Live Search Maps. Using this feature, you can create SUPER high resolution 3D models using trueSpace, then right from the environment upload the model into Live Search Maps as a collection item (source).
Here you can find a first tutorial on getting started with trueSpace and Virtual Earth. Enjoy!