Microsoft now allows FREE download and use of Visual Studio Express Editions. They possess all the needed tools for software development, but lack some of the large-scale power tools some people will be used to (like source control). Available for web development, C#, VB, C++, J# and SQL. Each component is a separate download, and requires registration to keep working after 30 days, a small price to pay for one of the best development environments available(and certainly in the free price range). There are no extra license restrictions or limitations for using the express development tools instead of the professional version to develop and distribute commercial programs. All use the .NET Framework 3.5.
Microsoft now allows FREE download and use of Game Studio Express Edition. Game studio express is built on top of the C# express edition, and is designed to make creating games for both Microsoft windows and the Xbox 360 quicker and easier then ever before. However, running XNA games on the Xbox 360 requires that you pay a monthly subscription fee.
SharpDevelop or #develop allows you to create C# and VB.NET projects on Microsoft's .NET platform. It's an open source project, so that means you do not need to spend lot's of money on the full version of Microsoft's Visual Studio!