Using C# 3.0 from .NET 2.0
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I'm looking forward to Orcas. It's a (mostly) additive release, similar to 3.0. The CLR itself doesn't really change (there is a service pack level update, but you're essentially still running v2). There are updates to the compilers, the IDE and new libraries that add to .net 2 and .net 3.0 (such as System.Core.dll).
One of the nice things Orcas allows is "multitargeting", where you can target different versions of the framework (2.0, 3.0 or 3.5). Of course, if you're targeting a down-level version, you'll lose support of that framework version's assemblies (e.g. no WPF apps in a 2.0 targeted application). What might not be obvious is that the compiler still supports the 3.5 features, including the nice LINQ "select ... from ... where" syntax (although there's a caveat around that one).
Thanks to Daniel Moth for all this info!