Is SQL SERVER 2008 (not 2005) required to build Mobile Apps with VS 2008?

An application for PocketPC was developed in C# with Windows Mobile 5.0, VS 2005 and SQL Server 2005. It is working fine.

Then I transferred the code to a development machine with VS 2008 , .NET Framework 3.5  SP1 and SQL Server 2005.

Intellisense recognises references to System.Data.SqlServerCe correctly but the build raises errors for every reference to System.Data.SqlServerCe objects, like:

The type 'System.Data.Common.DbConnection' is defined in an assembly that is not referenced. You must add a reference to assembly 'System.Data, Version=2.0.0.0, Culture=neutral, PublicKeyToken=b77a5c561934e089'.

An .sdf file modified by the program and deployed to the device is not readable on the device with Query Analyser error:
Invalid database version 3505053; requested version 3004180.

My references to System, System.Data and System.Data.SqlServerCe are consistent, meaning that they all come either from .NET Framework 2.0 or from 3.5 but this does not help.

How can I add a reference to the System.Data with a specified token?
Does this all mean that I have to instal SQL Server 2008 to get the right Data.SqlServerCe version?
Can I "downgrade" my VS2008 to retain compatibility with an existing code from VS2005?


Thanks