Scott guthrie has released a second beta of the new web application type.  I am going to test with this new type and see the results and possibly make a new release with it.  Several users have been contacting me that they still get errors when opening the project in VS 2005.  This is becauce we are using the new web application type that is only a preview.  On the 10th of feb, Microsoft released a second preview that might clear up some issues.  They plan to make an official release of the web application type [ which will end everyones problems ] in March.  I believe the issue that some are getting [ even when they have the new App type] is because VS 2005 is reading some old codes still in our .csproj files.

Please read up on the new type :
http://webproject.scottgu.com/