Marek Safar has announced that the Mono C# compiler, gmcs, now has full C# 3.0 support. In order to take full advantage of it, you will have to also use the upcoming Mono 2.0 release. This release will include many of the new .NET 3.5 features such as expression trees, which are essential for many LINQ providers.
Also in Mono 2, the licensing agreement for gmcs is changing. In order to make it compatible for embedding in other projects, it will be released under the MIT X11 license.
Linear IR, the new backend for Mono's JIT compiler, will also be debuting in Mono 2. Early tests show a 10 to 50% improvement in performance depending to the benchmark.