If you have SQL based apps, they will have to upgrade to SQL 2005 SP2 (that includes the MSDE replacement SQL Express).  e-Week noted (SQL Server 2005 SP1 Users Face Vista, Longhorn Glitches):

These two operating systems will only support SQL Server 2005 SP2 "or later when it becomes available," according to Microsoft's SQL Server support Web pages. But there is no indication on these sites of how soon it will deliver SP2 or whether it will deliver the service pack at about the same time Vista and Longhorn are released.

the CTP of SP2 is available at http://www.microsoft.com/sql/ctp.mspx

More information on the problems users experience when not running SP2 is available at http://www.microsoft.com/sql/howtobuy/sqlonvista.mspx with support information at http://www.microsoft.com/sql/howtobuy/windowsvistasupport.mspx which notes:

Known Issues

This section describes known issues that relate to installing and running SQL Server 2005 on Windows Vista and Windows Server "Longhorn."

Issues Related to User Account Control
Microsoft Windows Vista includes a new feature, User Account Control (UAC), which helps administrators manage their use of elevated privileges.

Administrator rights inherited from Windows
Windows Vista users that are members of BUILTIN\Administrators are not automatically added to the sysadmin fixed server role when they connect to SQL Server. Only Windows Vista users that have been explicitly added to a server-level administrator role can administer SQL Server.

Administrator Access to a Report Server Deployment
User Access Controls can prevent administrative access to a Report Server deployment. To gain administrative access, connect to SQL Server using one of the workarounds described above and create role assignments on Home and at the system-level for your account.

Administrator Access to SQL Express
The UAC behavior described above prevents administrator access to SQL Express.

Application Compatibility Message May Display Multiple Times During Setup

Incorrect IIS Configuration Prevents Installation of SQL Server 2005 Components - When you install SQL Server 2005 on a computer that runs Windows Vista or Windows Server "Longhorn," you might receive a warning for the IIS Feature Requirement check item on the System Configuration Check page. To learn how to properly configure Microsoft Internet Information Services (IIS) before you install SQL Server 2005, see the Microsoft Knowledge Base article 920201.