1. No: .NET 2003 and .NET 2005 are two completely different things. VS.NET 2003 targets .NET 1.1 and VS 2005 targets .NET 2. There are "upgrade wizards" to convert 2003 projects to 2005, but there is no way back. Also, I don't think any ASP.NET project can be converted successfully because of the many differences.
2. Yes. I have VS 6, VS.NET 2003 and VS 2005 running side by side without a problem.
3. I suggest you check out the RTM Express editions of Visual Web Developer 2005, Visual C# 2005 and VB
2005. All of them are free. These versions have a lot in common with their bigger brothers like the Standard and Professional versions. For personal / hobby sites and even small development shops, they should be more than enough.
If you like what you see, you can always upgrade later and transfer *all* of your knowledge / experience to the full versions; unlike the transition from the free Web Matrix to VS.NET 2003.
Everyone is unique, except for me.
While typing this post, I was listening to: Scum
by Nick Cave & the Bad Seeds
(Track 9 from the album: Your Funeral...My Trial
) What's This?