Does Visual Studio 2008 and Expression Blend work with Silverlight 3?
Yes. In order to build Silverlight 3 content with Expression Blend, you should use Expression Blend 3 together with the Silverlight 3 SDK. In order to build Silverlight 2 content with Visual Studio 2008, you should use Visual Studio 2008 SP1 together with the Microsoft Silverlight Tools for Visual Studio 2008 (which contains the Silverlight 2 SDK).