Yes, you can use the RadControls for ASP.NET AJAX with Visual Studio 2005. Here is a quote from the Support FAQs
here on the Telerik site:
RadControls for ASP.NET AJAX work seamlessly on .NET 2.x and .NET 3.x and are compatible with VS.NET 2005/2008 design mode.
Each installation package (ZIP, EXE) comes with two folders for
assemblies (/bin and /bin35 with ASP.NET 3.5 build of
Telerik.Web.UI.dll) along with Scripts and Skins folders (which contain the necessary files to deploy RadControls on the particular framework in case you disable the embedded resources).
I hope that helps.