If you are, you’ll want to check this out: VS 2005 Web Application Project Release Candidate Now Available.
The goal with this new project-option is to address some of the feedback we’ve heard from people who are finding migrating existing apps to the new web-site project model in VS 2005 more work than they’d like to-do (especially because of the new web site build semantics of compiling a web project into multiple assemblies). The new project-type will also help enable some scenarios that web-site projects don’t handle as well today (for example: around sub-web projects where the sub-project isn’t an app in the ASP.NET/IIS sense, but rather feeds its generated assembly to a parent app’s \bin directory to run). It also provides a model that will feel very familiar/identical for people who don’t want to change how they structure their web projects from VS 2003 today (for example: using a project file, etc).
This new option does not replace the web-site project option introduced in VS 2005, which provides a lot of new features and flexibility for web apps. Instead we see it as a companion project-type that you can optionally choose to use instead depending upon the specific requirements of your particular scenarios and your preferred development workflow. Some developers will find the web-site project model more natural/easy and choose that. Other developers will prefer a more explicit model and tighter control over their project and choose this new project model option. Rather than force people into one or the other approaches, we are going to support both workflows and allow developers to choose whichever web project model works best for them, their app scenarios, and their code-base.