2005 Database on a 2008 Server?

We have SQL Server 2008, but I was notified by a vendor that one of the databases housed on it was still at 2005.  Is this even possible?
If so, what does the process to convert the database to 2008 entail?
Thanks,
Nick

Yes, It's possible but other way is not possible.
The compatibility level is still point to low version. In reality this is not a major problem,you can set the compatibility level of the database to current version.
If you don't want do then in the long run you will not be able to take advantage of newer features though you upgrade your databases.
Check the compatibility level it should be set 90 in your case.
SELECT compatibility_level FROM sys.databases WHERE name = '<databaseName>'
Set it to current version that is 100
ALTER DATABASE <DBNAME> SET COMPATIBILITY_LEVEL = 100
You can also do this using SSMS

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