Some quick prep /initial prep / background reading for the workshop with Microsoft at their Reading Campus.
Latest version is currently 3.5 (3.5 RTM 3.5.7283.0 - 2007-11-19)
Overview of 3.5 features http://searchwindevelopment.techtarget.com/news/article/0,289142,sid8_gci1285069,00.html
You can determine the installed CF versions by running /Windows/cgacutil on the device (several versions can be co-installed without issue).
CF 3.5 goes hand in hand with Visual Studio 2008 (whereas the older 2.0 was paired with VS 2005).