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The release of the VSTO 2005 SE Beta ("Cypress") has given developers a way to build application-level add-ins for either Office 2003 or Office 2007. But the SE version is not a superset of the VSTO V3 ("Orcas") functionality, and some people (me, for instance) have found the differences a bit confusing.
Wouter van Vugt has posted a simple table that shows which VSTO version does what, with links to where you can learn more about about the technologies involved. Nicely done, Wouter -- I'll go be confused about something else now. :-)
Breaking News: as of late yesterday, a few hours after Wouter's post, there is a September CTP of Orcas available on a VPC image. The VPC image packaging -- a first for a Microsoft CTP -- means you don't have to make any changes to your existing configuration in order to give it a test drive. There's a long list of highlights for this release, including Vista support and Linq support. Check it out!