What .NET 2.0 mean to You
It will be out soon, so be aware of it! Even if you are not targeting it your end users may have it installed.
When developing with 2.0 you need to re-evaluate your techniques, best practices and debugging because of all the changes. 2.0 is more mature then 1.0 - .Net is out of its adolesence.
The 2.0 framework is actually smaller then the 1.x framework because it uses generics internally.
Avalon will be released on 2.0, but Longhorn might not be here until .net 3.0
What .NET 2.0 mean to Microsoft
Microsoft is betting the server farm on .NET 2.0 with its attempt to move into the Enterprise Computing space with Yukon. Everyone said that they would take .NET seriously when Microsoft integrated it with Office - It is a bigger deal that Yukon will use .net then for Office to support it.