migrating from SQL server 2005 to 2008
Even if you are using the newest version of SSMS, and SQL server 2008, that does not automaically upgrade any databases that you have attached to it. I can see SQL Server 2000 databases in SSMS for SQL Server 2008. Any database that is not upgraded cannot use SQL Server code from the newer version. If you are in compatibility mode, you may not be able to use all functionality of the newer version. I would suggest you connect to the database you want to use new features in and see what version the database is:

Select @@version


Note - do not upgrade the database to SQL Server 2008 unless the production databse has been upgraded or you will write code that can't be moved to production. Upgrading a database to a new version is delicate and time-consuming process requiring much testing. Many companies take years to upgrade to new versions as a result.