The way I would handle this is to simply tell your users that they need SQL Server 2008 Express installed with an instance name of SQLEXPRESS. There really is no reason for anyone to have multiple versions of SQL Server Express installed on a workstation and there's no reason for anyone to use a different instance name. Anyone who already has SQL Server 2005 Express installed should simply uninstall it, because 2008 will handle any existing apps just as well.

Using 2005 may be a way to lessen the chance of issues but there's still the chance of installing that on a system that already has 2008 installed. To be honest, I really don't know exactly what would happen if you installed one on a system that already had the other. They'd coexist fine, I'm sure, but I'm not sure what would happen with the instance names. There's one easy way to find out though: test it for yourself.