I've largely moved from VS 2003 to 2005 for Compact Framework 1.0 development. I'm finding it a lot quicker and more stable, especially when debugging. That's my experience, though.

At home, C++ Smart Device projects are broken - it simply says 'create failed' on the status bar. This may be due to IE7 Beta 2 Preview though (not installed the latest version yet) since the project wizard is an HTML dialog.