Before I answer, just think about it. If they weren't compatible, each developer would have to port their application over to the iPhone 4. Not every developer is diligent. Apple is a very user-friendly company. Would they handicap their iPhone upgraders? And why in the world would somebody buy an iPhone 4 if you couldn't use the previous applications? That would be like buying an iPad without compatibility with iPhone applications, but worse. It's still usable, but much less fun. That said, it will support previous iPhone applications.
everything I've tested runs under 4.0b4, let alone 4.0b5. That is, don't be afraid of incompatibility issues.
