I am developing a web application using ASP .NET 2.0, VS 2008 and SQL Server 2005. I would like to Use SSRS 2005 for the various reports I need to build for this web application
In order to better provide an analysis, it would be easier to if we new what alternative you are considering. For example, if it's SSRS vs nothing then the argument is simple, likewise SSRS vs bespoke reports (eg. ASP.NET). However, if you have other reporting tools under consideration, e.g. Crystal then we can be a bit more critical. Also, what kind of reports are you planning, and what features do you ideally need.
Regardless, I'd largely agree with the other posters. SSRS is free & very capable. Other systems might have extra bells & whistles, but would these be issues that mattered, and are prepared for the costs?
I suppose, given that SSRS is free and easy enough to setup, my suggestion would be to run a trial; you'll probably be able to make your own mind up through a bit of experimentation - you've got nothing to lose!