Microsoft .NET Compact Framework version 2.0 Service Pack 1 has been released as a download. The service pack includes stability improvements, new debugging features, extended platform support, and new developer functionality. Most notably, users can install the runtime to removable storage (Windows Mobile) — which is especially useful for devices that ship with limited storage space. For more information see the .NET Compact Framework Team Blog.
Important: This redistributable enables running .NET Compact Framework applications on the Pocket PC, Pocket PC Phone Edition, Smartphone, and other Windows CE powered devices. To develop .NET Compact Framework applications, Microsoft Visual Studio 2005 or the Microsoft .NET Framework 2.0 SDK are required.
There are QFEs in the works for Windows CE 4.2 and Windows CE 5.0 to support the updated Compact Framework bits - keep an eye on the NETCF team blog for more information.