Like many other people I know and read about, I switched my primary production system over to Windows Vista starting with the release of Beta 2. I spend most of my time in Visual Studio 2005, Office 2007, and a few miscellaneous CAD tools for embedded systems development. Since the release of Beta 2 I have had very few stability problems and most of my software has worked without issue (with the exception of Camtasia, which I think is a TechSmith problem).
When I was getting ready to update from RC1 to RC2 I was assaulted with a horrific message, "SQL Server 2005 is not compatible with RC2". I use SQL Server Express 2005 almost on a daily basis and depend on it for many of my development projects. The update looked like it could continue and would not uninstall SQL Server Express 2005, so I decided to give it a try and hope for the best.
During the update I decided to do some reading in the development blogs and found that people were having problems getting RC2 to even allow them to install SQL Server Express 2005. I did find some people who were able to use it once it was installed though.
After the update and some more reading I was able to solve the problem and have been using it reliably ever since. First, the SQL Server service still starts and runs with no errors in the event log. It seems the trick is to be sure that any application that needs to connect to a database is running as an administrator. This includes Visual Studio 2005 and SQL Server Management Studio. For development purposes this is not a problem and has worked great in my environment. Obviously you would not want to deploy a system with this constraint, but there is probably some subtle permission that needs to be assigned in order to solve the problem, and running as an administrator fills that need.
My opinion is that MS probably is not supporting SQL Server 2005 on RC2 because of the inherent security issues related to requiring all connecting applications to be running with elevated rights. I would have made the same decision. However, in a development environment where the user knows what they are doing, the security issues are almost nonexistent.
Microsoft has some documentation on their SQL Server web site, while not specific to RC2 it is helpful for troubleshooting.
On a final note, I would like to say that it is my opinion that Vista is the best operating system to date. The Aero Glass and other UI enhancements are just fluff, the real achievement is the underlying kernel and all of the new subsystems (UAC, file system, indexing, networking, etc.). This is an OS that is a decade ahead of anything else currently available. Good job Microsoft developers!