Microsoft just released the SP1 beta for Visual Studio 2008 and the .NET Framework 3.5 and it includes a huge number of new features and enhancements.  Check out Scott Guthrie's blog for details but here's a quick list of what's included:

• ASP.NET Data Scaffolding Support (ASP.NET Dynamic Data)
• ASP.NET Routing Engine (System.Web.Routing)
• ASP.NET AJAX Back/Forward Button History Support (very cool if you build AJAX apps!)
• ASP.NET AJAX Script Combining Support
• Visual Studio 2008 Performance Improvements HTML Designer and HTML Source Editor
• Visual Studio 2008 JavaScript Script Formatting and Code Preferences
• Better Visual Studio Javascript Intellisense for Multiple Javascript/AJAX Frameworks
• Visual Studio Refactoring Support for WCF Services in ASP.NET Projects
• Visual Studio Support for Classic ASP Intellisense and Debugging
• Visual Web Developer Express Edition support for Class Library and Web Application Projects
• Application Startup and Working Set Performance Improvements
• New .NET Framework Client Profile Setup Package (great if you build Windows Forms apps!)
• New .NET Framework Setup Bootstrapper for Client Applications
• ClickOnce Client Application Deployment Improvements
• New Windows Forms Controls (PrintForm, LineShape, OvalShape, RectangleShape, DataRepeater)
• WPF Data Improvements
• WPF Extensible Shader Effects (cool effects like drop shadows)
• WPF Interoperability with Direct3D
• VS 2008 for WPF Improvements
• SQL 2008 Support
• ADO.NET Entity Framework and LINQ to Entities
• ADO.NET Data Services (formerly code-named "Astoria")
• WCF Development Improvements
• VB and C# Improvements
• Team Foundation Server Improvements

Wow!  They've been busy bees up there in Redmond....great stuff!  They're currently planning to ship the final release of SP1 later in the summer.  Download SP1 beta here.