URL Routing lets you create routing tables for your ASP.Net Web sites. This is a feature that was originally developed for the ASP.Net MVC Framework, which is still in preview; it was useful enough by itself that it was split off and released with SP1. The MVC Framework looks roughly like what you'd expect if you saw a proposal whose one-line sell was "ASP.Net meets Rails."
What does URL routing actually do for you? Instead of having to use HTTP POST or query syntax to get to a data-dependent page, or having to do URL rewriting, you can use an ordinary-looking URL and have it translated by a routing table, which is more consistent with RESTful design and with the way search engines work -- and more like Rails.
Speaking of REST support, the new Windows Communication Foundation (WCF) Web Programming Model adds support for REST, AJAX, and JSON services, and both ATOM and RSS feeds, to WCF's already strong support for XML Web services, the WS-* stack, and an efficient but proprietary binary protocol. Who says Microsoft is out of touch with Web 2.0 and SOA?
On the desktop
I have had several issues with Windows Forms client applications in the past: First, they wouldn't run from network shares because of security issues. Second, their installation footprint was quite large on computers that didn't already have the .Net Framework installed. Third, they were slow to start. All of these problems have been fixed nicely in SP1, and several new Windows Forms controls have been added, the ones that used to be in the downloadable Visual Basic Power Packs -- only they aren't restricted to use from Visual Basic. In addition, Windows Presentation Foundation (WPF) design and debugging have been significantly improved.
If you're a C# programmer, you'll be happy about the improved flagging of potential errors (see screen image). That's the sort of help that Visual Basic programmers have come to expect from the editor; now C# has it as well.
Visual Basic programmers have one new toy that C# programmers can't claim; it's called XML to Schema (see screen image), and it's a way to automatically infer an XML schema from the XML file. C# programmers still have to load the XSD and XML files manually.
Time-consuming, but worth it
I haven't found any downside to installing VS08 SP1, other than the time; it took me several hours to download and install it over a relatively good broadband connection: if I had to do it again, I'd kick it off just before I went home for the day. Note that the updated MSDN documentation requires a separate download and installation. Once installed, the SP1 changes are, in my experience, all good. Unless you have add-ons or SDKs that still require Visual Studio 2005 (the .Net Micro Framework comes to mind), I don't see any reason for a Microsoft shop not to completely switch over to Visual Studio 2008 SP1.
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