We are a mostly MS shop at work doing .NET LOB development. We also use MS Dynamics for our CRM app... all the devs are currently using VS/SQL Server 2008. We also use VSS, but
First off, see this post:
SVN vs. Team Foundation Server
As to your question about which environment better fosters TDD and such, my two cents is that the build management system matters much less than what's in the build file itself. Your Ant or MSBuild file should have the targets that do your testing. With MSBuild or Ant, you don't have to use MS's test suite. You can still use nUnit or whatever else you want. That means it doesn't matter if TFS is calling your MSBuild file, or if CruiseControl is, or if TeamCity is. The smarts are all in the build file and the tools you integrate with it.
My personal choice is not to get locked down into TFS's way of doing things, since you have a lot more freedom for a lot less cost with the wealth open-source testing tools that are out there. TFS is about to receive a major upgrade, as well. If you are going to go with TFS, my advice is to at least wait until 2010 is released. Concentrate on making your MSBuild files as good as they can be right now.
That being said, I must admit that TFS has one of the nicest build systems out there (2005 was terrible, 2008 was nice). Being able to easily customize notifications and the release process all inside .NET code was pretty cool -- you had a lot more central control over build and release policy than we did with CruiseControl.NET.
So I've used TFS and SVN/CCNet. I can't speak much to TeamCity. But IMO a build management system should be fairly agnostic to what is being built and how it's being built. For us, the extra control in the release management process that TFS brought us just wasn't enough of a bonus for us to justify the greatly increased administrative effort of a fully integrated TFS solution. Nor was it enough to justify the extra per-license cost of TFS, which can be significant.
The old TFS Build was XAML based and very cumbersome and and not nice to work with. That said, the new TFS 2015 build system is leaps and bounds better, and is script based with lots of web hooks and 3rd party integrations; very similar to Team City. Also, TFS now supports Git, so you are no longer confined to using Team Foundation Version Control (TFVC). Also, with TFS you can use your own on-prem installation, or can take advantage of a hosted solution through visualstudio.com. TFS is great because it's one completely integrated environment (work items, planning, builds, tests, deployments), whereas Team City is just a build solution. When this question was originally asked in 2010 I would've recommended Team City hands down. Now though, the 2 are very competitive. I would say that it would maybe boil down to if you want an all-in-one solution, then go with TFS, but if you are looking for purely just a build system, then Team City.
We are a small development shop, and decided that Team Foundation Server carries too much overhead for us. We used to write custom MSBuild scripts to run from the command line, but after we discovered TeamCity, we moved our entire build process over to it.
We've found TeamCity to be easy to use and configure, and JetBrains provides excellent support and documentation. They are also on a much faster release and update cycle than Microsoft.
Their support for SVN source control is excellent, and we like the fact that they support both MSTest and NUnit for unit testing.
We also liked the fact that the TeamCity Professional edition was free, so we could evaluate it to see if it worked for us. We haven't hit the number of project configurations (20) that would require us to upgrade to the Enterprise edition.
The benefits of TFS are one integrated environment that is supported by Microsoft. I personally do not like TFS for source control and have had a number of issues with it. It is clunky, however it had the benefit of having VS integration (which is also available in VisualSVN, but is not as robust).
Personally, I think you would be much better off using SVN/TeamCity. It is just easier to work with and behaves more as you would expect. As with most open source software, both are constantly evolving and will always have the latest and greatest feature before Microsoft. The integration between the 2 is really good and I have found no fatal flaws in the system. I constantly push to go this route in my current company (we use TFS), as I believe it is a much better workflow. As an added benefit, it is significantly cheaper than going the TFS route.
I have also used FinalBuilder with TFS - my question there is what are you really buying with FinalBuilder that you can't do with NANT/MSBuild? The answer at my shop is unfortunately very little IMO.
MS is years behind in the TDD/CI area
Being one who has TDD'd for 4 years now you are correct. MS is still not even promoting it nor do they offer tools that work well with the TDD flow.
Don't get stuck dealing with Visual Studio for any kind of automation, source control, or agile workflow period (stop using TFS please!!). That stuff even though they say is "new" is monolithic and always comes with weird issues and bloat. It is always painful.
I've used Team City and it's simply amazing, things work, it's designed for usability, and it's simply designed well and compatible with most all test tools, etc. Fine use Visual Studio for code, nothing else. Look for external and open source tools to help build a better CI. The "you can do everything right in VS" sell is not selling, and it's not working. People nowdays are used to and always combining different tools from the outside to get things done. Relying on all MS toolsets is just not the way to go IMO for .NET. MS likes to sell "hey you can just do everything right here". But you end up with nothing but pain when you go that route and drink their koolade (TFS, MS Fakes, etc.).
If you plan on doing TDD, you definitely don't want to be using all MS tools. You'll either be pushed down "their way" of doing things which is often proprietary and/or bloated when you try to TDD with their tools or be totally restrictive. For TDD you need to be able to have some flexibility and choices when you decide to layer in different test frameworks, assertion libraries, etc.
Add Octopus on top of Team City, and it's stellar...you will simply fall in love with it as developer or for anyone doing DevOps.
Stop trying to rely on Microsofts continued failure at agile tool offerings
Start looking outside the box and try new things is what I keep repeating to the .NET world, me being a .NET developer in the past and who has tried new things outside the MS world.
Comparing TeamCity to Visual Studio Team Services (the latest cloud-based offering from Microsoft):
Both work great for implementing a continuous integration process
TeamCity is more mature and everything just works.
Visual Studio Team Services by contrast is constantly evolving to catch up with TeamCity and some things just don't work well (e.g. try triggering builds based on paths that have changes from Git - the documentation is weak and the feature itself just doesn't work (as of August 2016))
Visual Studio Team Services makes it easy to have only cloud-based agents running your build (the downside however is that each has to do a clean pull of your repository for each build which may add a minute or more to the build). Both can also support local build agents which do not need to wipe the working directory for each fresh build.
But in either case I would highly recommend you also look at CakeBuild which moves most of the configuration information about how to do a build out of the CI system and into C# code that is in your Git repository along with all your other source code. With CakeBuild you can run the same build locally as you will run in the CI system and if you need to go back a month to build a specific version you have the source code and the build script to do it.
With CakeBuild in place you are now free to easily switch between TeamCity and Visual Studio Team Services.
The only downside to CakeBuild is that all your build steps are bundled into a single task in the CI system which makes reporting slightly less nice and may involve some extra work to get the test results out into a format that the CI reporting system can use.