Other than Active Sync not working, are there any other limitations that I need to consider when targeting a Windows CE 4.2 device for a CF 3.5 application in C# that uses WCF to talk to a server?
It depends on your target machine. If you have limited storage resource (ROM, flash disk?) you must consider the system image size, since CF adds some megabytes to your binary. I had to remove some componets to gain about 1 Mb on my (quite small) ARM-based target.