What are the new features of Framework 1.1 ?

1. Native Support for Developing Mobile Web Applications

2. Enable Execution of Windows Forms Assemblies Originating from the Internet
Assemblies originating from the Internet zone—for example, Microsoft Windows® Forms controls embedded in an Internet-based Web page or Windows Forms assemblies hosted on an Internet Web server and loaded either through the Web browser or programmatically using the System.Reflection.Assembly.LoadFrom() method—now receive sufficient permission to execute in a semi-trusted manner. Default security policy has been changed so that assemblies assigned by the common language runtime (CLR) to the Internet zone code group now receive the constrained permissions associated with the Internet permission set. In the .NET Framework 1.0 Service Pack 1 and Service Pack 2, such applications received the permissions associated with the Nothing permission set and could not execute.

3. Enable Code Access Security for ASP.NET Applications
Systems administrators can now use code access security to further lock down the permissions granted to ASP.NET Web applications and Web services. Although the operating system account under which an application runs imposes security restrictions on the application, the code access security system of the CLR can enforce additional restrictions on selected application resources based on policies specified by systems administrators. You can use this feature in a shared server environment (such as an Internet service provider (ISP) hosting multiple Web applications on one server) to isolate separate applications from one another, as well as with stand-alone servers where you want applications to run with the minimum necessary privileges.

4. Native Support for Communicating with ODBC and Oracle Databases

5. Unified Programming Model for Smart Client Application Development
The Microsoft .NET Compact Framework brings the CLR, Windows Forms controls, and other .NET Framework features to small devices. The .NET Compact Framework supports a large subset of the .NET Framework class library optimized for small devices.

6. Support for IPv6
The .NET Framework 1.1 supports the emerging update to the Internet Protocol, commonly referred to as IP version 6, or simply IPv6. This protocol is designed to significantly increase the address space used to identify communication endpoints in the Internet to accommodate its ongoing growth.
http://msdn.microsoft.com/netframework/technologyinfo/Overview/whatsnew.aspx