This is not true. In fact users of MS Visual Studio 2003 and 2005 cannot work on a project together! I use Parallels to load up VS and all of our developers had to switch to the latest VS at the same time because once you convert a project you can't go back.
At least they've corrected this problem in 2008: You can work on framework 2, 3 and 3.5 apps within the 2008 IDE (and in some cases gain new features even when still targeting framework 2).