I just did some research on Visual Studio and Vista. Here is what I found:

It seems Visual Studio 2002 and 2003 will not be supported on Vista. Visual Studio 2005 will need Service Pack 1 to run on Vista, but is expected to have a list of known issues and workarounds.

Visual Studio 'Orcas' will be the tool you need to develop WPF applications.

Visual Studio 6.0 will be supported on Vista.

The recommended approach for maintaining .NET 1.0 and 1.1 applications on the Vista platform is to run Visual Studio 2002/2003 in a VirtualPC environment.

I guess from the various responses on the Internet this last point is causing some controversy, but really, this is the way to go. Why waste energy on supporting legacy software when you need to be making better newer versions? I just wish there was a version of VirtualPC which I could use to create a 'VirtualApp'. A tool, just like VirtualPC, setup with it's own OS, but excellent host integration, which I can setup to run exactly one application. Booting the application may take a little longer, but 100% backwards compatability can be guaranteed!