I worked in Kansas in 2005. I moved to New jersey in 2006 Jan but my taxes continued to be withheld from Kansas for the first 6 months during 2006. My employer failed to update my address while generating the paystubs.
Can I file for only New Jersey or do I need to file taxes for both states?

You need to file in BOTH states, but pay ONLY on the income earned while in each respective state.

You may need to get professional help with this one.