Big Daddio:TorqueX 2D works very well, I have been using in one of my projects. TX 3D on the other hand... well Both have been updated for XNA 3.1 however many of us who own a Torque Source License are unable to get much out of TX 3D. If you have John K's Book then you have a great start. Go and check out the TX forums for more info.
I'll make a note of that in my XNA talks. I usually recommend TorqueX for 2D stuff, but haven't played with TX 3D at all. I do like TX 2D quite a bit though, especially the Platformer Starter Kit (which is fantastic for the relatively low price.) Did they ever release any of the other kits for TX 2D? At one point there was talk of a RTS Starter from Simian.