Yes, for a limited time (1 year), Visual Studio express editions are going to be free. SQL Server Express editions will be free always.
More details at http://msdn.microsoft.com/vstudio/express/
Start downloading folks.
Clarifications on the free offer at http://msdn.microsoft.com/vstudio/express/support/faq/default.aspx#pricing
And yes, you cannot develop V1.1 applications with VS2005 Express editions. tsk tsk