Check out this blog post from Richard Greenberg on the Compact Framework team - looks like Windows CE 4.2 is going to be supported in Compact Framework SP1.
One question that has come up recently from customers and MVPs is whether .NET Compact Framework 2.0 (aka .NET CF 2.0) and SQL Server 2005 Mobile Edition (aka SQL Mobile) is supported on Windows CE 4.2. Currently both .NET CF 2.0 and SQL Mobile are supported on Pocket PC 2003 which is based on Windows CE 4.2, but they are not supported on Windows CE 4.2 itself. In response to strong customer demand, Microsoft is pleased to announce additional support for both .NET CF 2.0 and SQL Mobile on Windows CE 4.2 and they will be supported for following processor types: ARMv4, ARMv4i, MIPSII, MIPSII FP, MIPSIV, MIPSIV FP, SH4 and x86. .NET CF 2.0 support on Windows CE 4.2 is planned as part of SP1 release of .NET CF 2.0, which is scheduled in first half of 2006. SQL Mobile support on Windows CE 4.2 is planned as web download release and it will be available at the same time as the SP1 release of .NET CF 2.0. No additional support for Windows CE 4.2 is planned in Visual Studio 2005.
(A behind-the-scenes look at why/how this decision was made can be found here.)