Well we'll be (AFAIK) using 2008, because it can target 2.0. So at least I'll benefit from some of the new stuff. They did state the reason for not moving to 3.5 yet, I believe it had something to do with SQL Server 2008... I'm not involved in that side of things though, so I know bugger all details.
It's sort of internal, sort of not. We're a local government body that has a lot of "affiliated" groups/organisations using our software. But we don't control the machines in all of them.