If you want to use VS, then pretty much, yes.
There are some horribly tortured hacky things you could possibly do to
cobble together something that just about compiles, but why bother? 2.0
introduces so many language features (partial classes, anonymous
methods, generics, etc) that you can't expect a botched 2003 2.0 hybrid
to work very well. If the issue is cost, download a 2005 express
edition (from MS - link follows) for nil, nada and zip. Or perhaps use
a freeware IDE or just csc / msbuild directly.
Marc
http://msdn.microsoft.com/vstudio/express/