If you have upgraded to TFS 2010 but still want to keep using Visual Studio 2008,
Make sure you have Visual Studio 2008 SP1 and Team Explorer 2008 installed. Then install the Visual Studio Team System 2008 Service Pack 1 Forward Compatibility Update for Team Foundation Server 2010.
And when you are adding the TFS2010 server to you VS2008 Team Explorer, in the "Add Team foundation Server" dialog, make sure you enter the full url.
Failure to do so will result in "Unable to to connect to Team Foundation Server" error.
If you still receive an error when Adding Server, you might have to re-install Visual Studio 2008 SP1 (only the service pack) and then re-install this Forward Compatibility Update.