Question: What does the Visual Studio development team at Microsoft use to develop new versions of Visual Studio? Do they use VS2005 to develop VS2008? Thinking about it makes my head hurt a little...

Answer: 
We [dogfood](http://news.zdnet.com/2100-3513_22-130518.html) our products, and VS is no exception.

/me goes back to his happy world of rainbows, unicorns, lambdas, `auto`, and `dynamic` ;)
C was implemented to write UNIX. UNIX is written in C. On UNIX, currently. At some point, you use what you've built to keep building it.

I'd imagine the very first go of VS2008 is written in VS2005, but then they start using VS2008 as soon as is feasible to continue developing VS2008.