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Flat files...Can it take flat files as Input and also genarate Flat files as o/p.=0A

Yes, all kinds of flat files, parallel reading is supported on a single machine and accross a cluster/SAN.

Can it support Cobol,xml ,excel spreadsheets .Whta is the relevant transformation ?

Cobol is a programming language.  All other file formats are supported.

Can it support Mainframes...If yes ,how will we connect to mainframes

A mainframe is a system with an operating system.  We can connect to the databases on it using JDBC or ODBC.

Can it support Oracle,Teradata,Netezza,SQL Server 2005/2000, Ms Access.

Yes, around 34 database types.

How many transformations does the tool has?

Around 100 steps are present in the latest version.

How is the performance when you are loading large amount of Data( 3 TB's) and do you have any chapter related to documentation for best practices related to performance?

Impossible to say, we have bulk loaders for a number of databases though.  They are as fast as it gets.

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http://www.pentaho.com/news/releases/20080728_mozilla_deploys_vertica_and_pentaho.php

Is there a development repository?

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Yes, it's called the "Mapping step":
http://wiki.pentaho.com/display/EAI/Mapping

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Again, it's handled automatically by the "Dimension Lookup/Update" step:
http://wiki.pentaho.com/display/EAI/Dimension+Lookup-Update

You don't need to do anything, just fill in the dialog.