The latest Project Server to TFS Connector was just released on CodePlex. This release of the PS2007 VSTS Connector is targeted to work with Team Foundation Server 2008 and resolves several bugs that were reported in the first two releases. They've done their best to ensure that this Connector is easy to install and well documented.
Unfortunately Team System 2008 isn't fully ready for Hierarchical Work Items. With the Hierarchical Work Items you can create a Work Breakdown structure. This structure is needed when you want full support for MS Project and Project Server. What can we expect of the future releases of Team System. In this example the new query “Work Breakdown” of Team System Rosario shows how “Tasks” are child items of “Features”.
When you try to open this in MS Project using the current CTP of Team System Rosario, it will flatten the structure.
Future versions of Team System will have native integration with Project Server, in the meantime this Connector solution is the best way to integrate the two Microsoft products. Hopefully this MS Project integration will work better in the next Rosario CTP so we can really start using work items the way we supposed to do. We still have a 'long' way to go, but as with most products of MS, the third version of a product really rocks.