Each distribution of RadControls for ASP.NET AJAX contains two sets of assemblies: one, built upon .NET 3.5 and another one, built upon .NET 4.0 (up to Q1 2011 the RadControls distribution contained a third set of assemblies, built upon .NET 2.0).
With that said, if you use a RadControls for ASP.NET AJAX release prior to Q1 2011, you can load your .NET 2.0 project (built with VS2005) in Visual Studio 2010. The IDE will perform an automatic project/solution update and you should be able to run the project normally.
As a further step I would suggest that you upgrade your project to TargetFramework 4.0 (and RadControls for ASP.NET AJAX respectively), for the new framework provides lots of improvements over the old one.
While it is possible to run .NET Framework 4.0 in Visual Studio 2010 and .NET Framework 2.0 in Visual Studio 2005, I suggest that you utilize the latest version of the IDE for both .NET 4.0 and .NET 2.0/.NET 3.5 development.
I hope this helps.
the Telerik team