I commonly get asked by my early adopters about which versions of SQL Server 2005 and VS.NET 2005 to use. Well, let me have a go at keeping it simple:
ISV just looking at SQL Server 2005: (using VS.NET 2003 or ealier) - use the June CTP of SQL Server 2005.
ISV just looking at VS.NET 2005: (using SQL Server 2000 or alternative DBMS) - if you are after stability and with taht productivity, use VS.NET Beta 2. If you wish to see the latest public build and don't mind instability and stuff breaking that previously worked in Beta 2, then use July CTP of VS.NET.
ISV looking at both SQL Server 2005 and VS.NET 2005: Ahh.... things just got a lot more interesting. Use the June CTP of SQL Server 2005 with Beta 2 of VS.NET 2005. Install June CTP of SQL Server 2005 first.
The July CTP of VS.NET does not work with the June CTP of SQL, nor does the June CTP of VS.NET. The June CTP of VSTS does need the June CTP of SQL Server to run on top of. If you do elect to use the July CTP of VS.NET then you must target the SQL Server 2005 Express edition that ships with it.
NB: I am thinking about a single developer workstation confirguration in the above.