Please see this FAQ "Does Java Studio Creator support Java 5?"at http://developers.sun.com/prodtech/javatools/jscreator/reference/faqs/configura tion/index.html
Does Java Studio Creator support Java 5?
The Java Studio Creator IDE does run on the Java 5 platform, however all web applications are constrained to being compiled and run with a target Java 1.4 platform.
For a Java Class Library project, it is possible to choose a target platform of 1.2, 1.3, 1.4, or 1.5 ... but only 1.4 libraries will work with a Java Studio Creator generated application.
Also: http://swforum.sun.com/jive/thread.jspa?forumID=123&threadID=59829
btw, <creator_userdir>/build.properties defines the user properties and defines the variable "default.javac.source" which is set to 1.4 by default. Not sure if changing it to 1.5 helps...