You still can use Framework 3.5 or 4.0 if you only have Visual Studio. The thing is: the build uses C# compiler and MSBuild which comes free with redistributable framework.
You can develop the code with Visual Studio 2005 and build it with v.2.0. Then, you can locate MSBuild and csc.exe (C# compiler), read description and use one or another for manual re-build of your project. You can also manually edit your *.csproj files (good to have a sample of a new version; you can find a lot in CodeProject) and increase the target platforms of the project.
Unfortunately, you won't be able to use new features of the platform unless you do all changes manually.
This is the alternative: use Open Source SharpDevelop:
http://en.wikipedia.org/wiki/SharpDevelop[
^]. It will allow you to use Framework up to v.4.0.
—SA