Those of you at TechEd as well as any other who already received May 2004 Community Preview of Whidbey may have noticed that Code view is gone from the Web Form editor. What happened? Well, we encontered quite a few problems implementing Code view. If you recall, the view was used to hide indent at the left, so
appeared in Code view as
i.e. indent inherited from <script> block would be hidden. Unfortunately, current VS IDE architecture does not have ability to arbitrarily position view window over the underlying text buffer. IDE has concept of hidden text that is used in code outlining and we did try to hide characters but in case of mixed indent (i.e. part spaces part tabs) things quickly get of control and then implementation becomes too complex. We tried to physically remove indentation effectively producing separate text buffer (Alpha release of Whidbey contained this implementation), but VS debugger as well as IDE were not able to associate two physically separate text buffers with the same document so breakpoints and bookmarks didn't work. We would have to duplicate everything in two documents in order to make it work, but debugger would be hitting breakpoints in only one of the documents. In addition separate code view didn't make much sense for render block and inline expressions.
So decision was made to remove the view so if you are working in the code-inline model, you will have to edit code in the Source (HTML) view. If you have a lot of code and want to see it separately from the markup, you probably should be using code separation model (code beside).
I have mixed feeling about this since I have spent considerate amount of my time on the feature. Oh well...