Leave the latest version of each .Net 1.0, 2.0 and 3.0 on the machine. There are long passages about this so I'll boil it down to the simplest answer I can give.
The other item is that Net 2.0 is not the new version of Net 1.0 but a new edition. The difference is subtle and I can see how many will think of them as versions.
I have an one question about Microsoft .Net Framework. Should I uninstall older version of Microsoft .Net Framework (in my case 2.0 Service Pack 1) because actually I have two versions:
Microsoft .Net Framework 2.0 Service Pack 1 and
Microsoft .Net Framework 3.0 Service Pack 1 ?