Visual Studio 2008 and .NET 3.5 contain a ton of new functionality and improvements.  Below are links to blog posts I've done myself as well as links to videos you can watch to learn more about it:

VS 2008 Multi-Targeting Support

VS 2008 enables you to build applications that target multiple versions of the .NET Framework.  This means you can use VS 2008 to open, edit and build existing .NET 2.0 and ASP.NET 2.0 applications (including ASP.NET 2.0 applications using ASP.NET AJAX 1.0), and continue to deploy these application on .NET 2.0 machines.  You can learn more about how this works from my blog post here:

VS 2008 Multi-Targeting Support

ASP.NET AJAX and JavaScript Support

.NET 3.5 has ASP.NET AJAX built-in (no separate download required).  In addition to including all of the features in ASP.NET AJAX 1.0, ASP.NET 3.5 also now includes richer support for UpdatePanels integrating with WebParts, ASP.NET AJAX integration with controls like <asp:menu> and <asp:treeview>, WCF support for JSON, and many other AJAX improvements.

VS 2008 and Visual Web Developer 2008 also now have great support for integrating JavaScript and AJAX into your applications.  You can learn more about this from my blog posts here:

VS 2008 JavaScript Intellisense

VS 2008 JavaScript Debugging

VS 2008 ASP.NET AJAX Control Extender Support

VS 2008 JavaScript Intellisense for Silverlight

You can watch some videos that discuss ASP.NET AJAX and Visual Studio 2008 support for it here. 

I also highly recommend the excellent ASP.NET AJAX in Action book to learn more about ASP.NET AJAX (both client-side and server-side).

VS 2008 Web Designer and CSS Support

VS 2008 and Visual Web Developer 2008 Express includes a significantly improved HTML web designer (the same one that ships with Expression Web).  This delivers support for split-view editing, nested master pages, and great CSS integration.  Below are some articles I've written that discuss this more:

VS 2008 Web Designer and CSS Support

VS 2008 Nested Master Page Support

VS 2008 Vertical Split View Support

VS 2008 Support to Treat CSS and JavaScript Validation Issues as Warnings instead of Errors

ASP.NET 3.5 also has a new <asp:ListView> control that provides the ability to perform rich data scenarios with total control over the markup.  It works nicely with the new CSS support in VS 2008.  You can learn more about it from my article here:

ASP.NET 3.5 ListView Control

You can watch some videos that discuss the new Visual Studio 2008 web designer features and the new ListView/DataPager controls here. 

Language Improvements and LINQ

The new VB and C# compilers in VS 2008 deliver significant improvements to the languages.  Both add functional programming concepts that enable you to write cleaner, terser, and more expressive code.  These features also enable a new programming model we call LINQ (language integrated query) that makes querying and working with data a first-class programming concept with .NET. 

Below are some of the articles I've written that explore these new language features using C#:

Automatic Properties, Object Initializer and Collection Initializers

Extension Methods

Lambda Expressions

Query Syntax

Anonymous Types

Here are a few additional blog posts I've written that show off some of the new VS 2008 code editing support and some cool ways to use these new language features:

VS 2008 Code Editing Features

Tip/Trick: Building a ToJson() Extension Method using .NET 3.5

The C# ?? null coalescing operator (and using it with LINQ)

Using LINQ to XML (and how to build a custom RSS Feed Reader with it)

The Visual Basic team has also created some great free videos that cover LINQ.  You can watch them here.

Data Access Improvements with LINQ to SQL

LINQ to SQL is a built-in OR/M (object relational mapper) in .NET 3.5.  It enables you to model relational databases using a .NET object model.  You can then query the database using LINQ, as well as update/insert/delete data from it.  LINQ to SQL fully supports transactions, views, and stored procedures.  It also provides an easy way to integrate business logic and validation rules into your data model.  Below are some of the articles I've written that explore how to use it:

Part 1: Introduction to LINQ to SQL

Part 2: Defining our Data Model Classes

Part 3: Querying our Database

Part 4: Updating our Database

Part 5: Binding UI using the ASP:LinqDataSource Control

Part 6: Retrieving Data Using Stored Procedures

Part 7: Updating our Database using Stored Procedures

Part 8: Executing Custom SQL Expressions

Part 9: Using a Custom LINQ Expression with the <asp:LinqDataSource> control

I think you'll find that LINQ and LINQ to SQL makes it much easier to build much cleaner data models, and write much cleaner data code.  I'll be adding more posts to my LINQ to SQL series in the weeks and months ahead (sorry for the delay in finishing them earlier - so much to-do and so little time to-do it all!).

Scott Stanfield is also working on creating some great LINQ to SQL videos for the www.asp.net site based on my article series above (all videos are in both VB and C#).  You can watch the first 4 videos in this series here.

Browsing the .NET Framework Library Source using Visual Studio

As I blogged a few weeks ago, we will be releasing a reference version of the .NET Framework library source code as part of this release.  Visual Studio 2008 has built-in debugger support to automatically step-into and debug this code on demand (VS 2008 can pull down the source for the appropriate .NET Framework library file automatically for you).

We are deploying the source servers to enable this right now, and will be publishing the steps to turn this feature on in the next few weeks.

Lots of other improvements

The list above is only a small set of the improvements coming.  For client development VS 2008 includes WPF designer and project support.  ClickOnce and WPF XBAPs now work with FireFox.  WinForms and WPF projects can also now use the ASP.NET Application Services (Membership, Roles, Profile) for roaming user data. 

Office development is much richer - including support for integrating with the Office 2007 ribbon, and with Outlook.  Visual Studio Tools for Office support is also now built-into Visual Studio (you no longer need to buy a separate product).

New WCF and Workflow projects and designers are now included in VS 2008.  Unit testing support is now much faster and included in VS Professional (and no longer just VSTS).  Continuous Integration support is now built-in with TFS.  AJAX web testing (unit and load) is now supported in the VS Test SKU.  And there is much, much more...