A couple of things about upgrading from Team Foundation Server 2005 to 2008 that I wanted to highlight:
1.) The new version of TFS Explorer does not work with VS 2005. However, you can use the TFS 2005 Explorer to connect to TFS 2008 Server and do 95% of what you need to do. Just install the VS 2008 version on at least one machine to get the extra features if needed, and it will work fine in a side-by-side deployment. If you want the TFS 2008 Explorer, you can download the stand-alone install here.
2.) If you are not doing an in-place upgrade and want to move your source code items and work items (with history), there is a tool on Codeplex that will let you do that (even between TFS 2005 and TFS 2008). You can find it here.
3.) You can download TFS Web Access for 2008 and it presents a very nice UI for interacting with TFS. The Visual Studio interaction is still a little scattered in my opinion.
4.) If you were using Changeset Comments in 2005, you will need to add the TFS 2008 Powertools to get that feature back.
5.) You MIGHT have a problem with adding items to 2008 if you already had 2005 on the same dev machine. I was having problems with phantom workspaces after I deleted them, connections to the 2005 server that wouldn't disappear no matter how many times I deleted them, Can Not Connect To Server errors when I tried to add items to the new 2008 server, etc. HERE IS THE BRUTE FORCE ANSWER: run devenv.exe /resetuserdata and everything will work. *Warning* Your personal Visual Studio settings will be erased if you do this, but that is not the worst thing in the world.