Visual Studio 2008 and the .NET Framework 3.5 Service Pack 1 is now in beta and available for download from MSDN. Make sure you don't install it on your development machine until you've tested your setup in a virtual environment.

Here is the feature set copied from Microsoft's website:

Visual Studio 2008 Service Pack 1 includes:

• Improved designers for building WPF applications
• Full support for SQL Server 2008
• The introduction of the ADO.NET Entity Designer
• Visual Basic and Visual C++ components and tools (including an MFC-based Office 2007 style 'Ribbon')
• Improvements to Team Foundation Server to respond to customer feedback on version control usability and performance, improved e-mail integration with work item tracking and full support for hosting on SQL Server 2008
• Improvements for Web development including richer JavaScript support, enhanced AJAX and data tools, and Web site deployment

The .NET Framework 3.5 Service Pack 1 includes:

• Performance increases between 20-45% for WPF-based applications - without having to change any code
• WCF improvements that give developers more control over the way they access data and services
• Streamlined installation experience for client applications
• Improvements in the area of data platform, such as the ADO.NET Entity Framework, ADO.NET Data Services and support for SQL Server 2008's new features.

Additional Details

In addition, Service Pack 1 for the .NET Framework and Visual Studio 2008 includes a number of new features:

• Windows Presentation Foundation (WPF) and Visual Designer Changes
• .NET Framework 3.5 Client Profile
• New ADO.NET Data Features
• Team Foundation Server Improvements

Windows Presentation Foundation (WPF) and Visual Designer Changes

• Cold startup performance improvement ranging between 20-45% depending on application size without needing to modify any code.
• Additional WPF features for text, graphics, and media to deliver better performance. For example, effects like DropShadow and Blur were implemented using software rendering; with Service Pack 1 these are now implemented using hardware acceleration. Other examples include:
  • Text, especially when used in Visual and DrawingBrush, is substantially faster.
  • Data scalability improvements - Container Recycling, TreeView virtualization, and more to enable richer data editing support
  • Media performance improvements
  • A much improved WriteableBitmap that enables real-time bitmap updates from a software surface
• Visual Studio 2008 introduced a brand new designer for WPF applications. Since Visual Studio 2008 released many additional features have become available for inclusion in the designers. These include event tab support within the property grid for control events, toolbox support within source mode, and a variety of other common asks and improvements.

Windows Communication Foundation (WCF) and Workflow Foundation (WF) Changes

• New Hosting Wizard for WCF Service projects.
• Enhancements in Test Client such as support for RM Sessions, Message Contract and Nullable<T> types enables testing of broader set of WCF-based services.
• Expanding reach of DataContract Serializer by relaxing the need of having [DataContract]/ [DataMember] on types and by supporting an interoperable mechanism for dealing with object references.
• Improved Partial Trust Debugging Experience with support for Event Log.
• Support for ADO.NET Entity Framework entities in WCF contracts.
• Improvements in writing REST based services ranging from easily supporting ServiceDocuments publication and consumption to providing greater control and usability of UriTemplate.
• Significant performance improvements on large workflow-based projects in Visual Studio.
• Considerable scalability increases for hosted WCF services in IIS7-integrated mode.