SQL 2008 RDL Files can't be read by BIDS 2005

Well, it's not really that surprising. You can't open an SSRS RDL file created in BIDS 2008 with BIDS 2005.

The solution? Install BIDS 2008 and you can open RDL generated by either version

Ultimate Guide to Upgrading to SQL Server 2008

The SQLCat team recently posted a link to this comprehensive guide on upgrading to SQL Server 2008. I would recommend having a read if you get a spare hour or two:

It is here on the SQLCAT blog
http://blogs.msdn.com/sqlcat/archive/2008/12/08/ultimate-guide-to-upgrading-to-sql-server-2008.aspx

Here is the direct link to the document:
http://www.microsoft.com/downloads/details.aspx?FamilyID=66d3e6f5-6902-4fdd-af75-9975aea5bea7&displaylang=en