>>When vs2008 already finds 3.5 installed, it skips the 3.5 installation step
>
>Ok, now, should I run my projects for NET 2.0 or .NET 3.5? Assuming the latest we would have to upgrade the servers, correct?
>
>What is the safe alternative for the time being and is it possible to switch in a future?

You can do your development in VS2008 IDE but choose to target the 2.0 or 3.0 version of the framework if necessary. See the Project Properties Application tab.
HTH,
Viv