Is string a value type or Reference type..

Check MSDN: string (C# reference)[^]

The second line states:
Although string is a reference type, the equality operators (== and !=) are defined to compare the values of string objects, not references. This makes testing for string equality more intuitive.

So it is a reference type but with some value-type behaviour ;)

This is a reference type but simulating value semantic in all aspects. For example, when you compare two referentially different strings, comparison (==) can be true — they are compared by the content. However, this is easy part: you can implement your own identity rules overriding System.Object.Equals, System.Object.GetHashCode (required) and optionally define custom operators "==" and "!=".

You can understand the essence of working with string references if you look at the properties system.String.Intern and system.String.IsInterned:
http://msdn.microsoft.com/en-us/library/system.string.intern.aspx[^],
http://msdn.microsoft.com/en-us/library/system.string.isinterned.aspx[^].

One important practical issue with the strings: they are immutable (in contrast to mutable arrays). Therefore, for performance reasons one should never use "+" in cycles. For this (and many other) purposes, use System.Text.StringBuilder.

—SA

I think in the context you are asking it is a value type. The code below will explain better than my sentences I think...

void Test(){
   string s = "A";//set string to A
   Change(s);
   //if s was reference type
   //   s would = "B"
   //if a was value type
   //   s would = "A" still

   //s will = "A" hence it is value type
}

void Change(string s){
   s = B";
}

Take a look here Strings[^]