I just got the D700, and was wondering which is the better lens for optics in portraiture.
Personally I feel the 105/2 DC is the better lens for portaiture - and I never bother with the DC feature.
At one time I owned three Nikon 105's - the 105/2.8 VR, the 105/2 DC, and the 105/2.5 AIS. After shooting with them I ended up selling the 105/2.8 VR since I mostly photograph people. The VR is a very good "all around" lens but I felt it's rendering just wasn't well aligned with what a portrait lens should do - it was too contrasty, too saturated, and just was a bit "too much" in terms of skin tones. Transitions were a bit "rough" and my subjective impression was there are simply better lenses for shooting skin, although it certainly wasn't horrible by any means. What is an excellent lens for one thing may not neccessarily be an excellent lens for another. The 105/2 DC, however, while not quite as contrasty or saturated in terms of colors has, in my view, a far superior sense of dealing with skin tone gradations - it just has a "way" with people that is much, much more than just how sharp a lens is or how well it measures on a test site. Ironically, in the studio at F/8, my 105/2 DC was slightly sharper than my 105/2.8 VR (although with a bit less overall contrast), which surprised me. Go figure, right?
Where the 105/2.8 VR would excel, however, is in wide open or near wide open sharpness without a lot of hassles. For some reason a lot of 105/2 DC's have problems with AF when at or near wide open. So if I were buying the 105/2 DC simply to shoot at 2 or 2.8 all the time - no, it would not be my choice. Stop it down to f/4 and it's my preferred portrait lens by a landslide, but if I were to live at 2.8, the VR would do a better job, or more likely, I'd prefer a manual focus lens like the more expensive 100/2 Makro Planar Zeiss ZF. And if you want to go cheap and manual focus, a used 105/2.5 AIS makes a heck of a portrait lens for a lot less money than either of the other two guys listed here, but manual focus isn't everyones cup of proverbial tea.
With these two lenses, though, I might suggest renting them both - maybe that lensrentals.com place or someone similar can help you out there. The rendering of these two lenses is quite different, and thus one may "speak" to you more than the other, and that's a personal choice that's hard to gauge in a forum thread.
-m