http://staff.develop.com/onion/Samples/aspdotnet_without_web_projects.htm
Excerpt:
The Web Project wizard in Visual Studio.NET is convenient for creating quick ASP.NET applications on your local machine, but in an effort to simplify your life, it also makes many decisions for you that are difficult to change if you need more flexibility. My biggest pet peeve with Web Projects is that you cannot even open a.sln file if the virtual directory mapping in IIS is not set up correctly. I also dislike the way it places.sln and.csproj |.vbproj files in a separate location from the actual source files (I understand that this is necessary to allow application creation directly on a server, but I never deploy that way).