@Dr Herbie: VS2008 Team Explorer doesn't know how to deal with TFS2010's multiple project collections, so getting them connected requires the full URL to the project collection instead of just the server name.
They both need an update in order to connect. http://www.microsoft.com/download/en/details.aspx?displaylang=en&id=3263 (2005)
I don't believe you can get an MSDN subscription separately from VS anymore, but I could be wrong.
Looking at U.S. retail prices (i.e. higher than you'll find in the wild),
TFS Upgrade + 3 CALs = $1900
VS 2010 Pro Upgrade x 8 = $4400
VS2010 Pro w/ MSDN x 8 = $9600
We were able to find VS2010 Pro w/ MSDN for a little over $500 per developer, so the retail prices above are next to meaningless.