Hit another issue last night while playing with the latest CTP - VS2005 can't cope with some of the changes in SS2008. The problem arose while defining an ASP.NET connection string that was pointing to a 2008 instance (while playing with query notifications and cache invalidation, but that's unrelated) - it failed with a slightly misleading error message from VS that my SQL Server instance had to be SQL Server 2005 Beta 2 or above!

Turns out there's a fix already (which works perfectly) - see http://www.microsoft.com/downloads/details.aspx?FamilyID=e1109aef-1aa2-408d-aa0f-9df094f993bf&displaylang=en. Thanks to Bob Beauchemin for helping me out.