Miguel de Icaza of Novel's Mono team has announced that Mono will support C# 3.0. However, before that occurs a lot of C# 2.0 bugs have to be fixed. According to Miguel,
Fixing bugs first turned out to be a really important. In C# 3.0 lambda functions are built on the foundation laid out by anonymous methods. And it turned out that our anonymous method implementation even a few months ago had some very bad bugs on it. It took Martin Baulig a few months to completely fix it.
That isn't to say no work has been done on C# 3.0. Miguel continues,
The second piece is LINQ, some bits and pieces of the libraries have been implemented, those live in our Olive subproject. Alejandro Serrano and Marek Safar have contributed the core to the Query space, and Atsushi did some of the work on the XML Query libraries. We certainly could use help and contributions in that area.
Another issue hindering the Mono team is that the spec is still in draft form and can change from month to month. Just as when they were working on the C# 2.0 compiler, there is a risk of having to redo too much work when the spec changes.