As we're currently mulling a full transition to VS2008 and .NET 3.5, I've been investigating VSTO3 and ClickOnce once again. My initial encounters with VSTO and ClickOnce were lacking. With regards to VSTO, I didn't find anything that I could do with it that I couldn't do without it. Indeed, it's more of an extension of the extensibility model which provides some under the cover plumbing than anything else.
The decision to attach ourselves to VSTO3 and ClickOnce is no light matter. Luckily, Cindy Meister (Office MVP) and Mary Lee (Microsoft) were kind enough to weigh in on the matter over at the MSDN forums.
I think all Office developers should head over and take a look as it contains a wealth of information (and clarifies some common misunderstandings) with regards to VSTO and ClickOnce.