I have been developing in WPF using VS2010 for a few months now and have just upgraded to VS2012 Professional and noticed it comes with Blend for VS.
Is this expected to replace GUI design in VS or is it for doing "extra" bits that cant be done in VS?
I want to know if I need to spend time learning this new tool?
Blend is primarily used to make designing your app easier. It can be used to replaced the Visual Studio designer but it's better to use VS to create the backend code. Assuming you have the same project opened in VS and Blend, when you make changes in one, the other will ask to reload these new changes.
Blend makes it a lot easier to write your XAML (since it's a WYSIWYG editor) but also provides easy access to some of the more complicated aspects such as data binding. You could do all this in VS, and by hand, but Blend just makes it more efficient. It also has nicer workflow features from a designer perspective such as having the ability to zoom in and out.
You don't have to learn to use it, but I prefer using Blend for the GUI design and VS for the code-behind.