I started developing this game in blender 2.49, and about 3 weeks after blender 2.5 started development. So throughout the dev process I have split the work between Blender 2.49 and Blender 2.5, but now that 2.5 is more stable, I've been slowly moving the whole project to 2.5. I am about 80% but its a pain.
And for those who dont know, Blender 2.50 is almost a rewrite! So many features have been put in. For example, the GUI has been completely redone, they added a Smoke sim, improved the speed for the internal renderer, and are in the process of adding Global Illumination. Blender is starting to mature into a nice 3d suit. But dont take my word for it! Download it yourself (its free) at -http://www.blender.org/