I did do the Fedora Core 1->2 upgrade last night, and it seemed to work fine. The only issue I ran into is that the POP package changed, so the ipop3d that things were configured to use no longer existed. A little research turned up that both cyrus-imap and dovecot had POP services built into them. I tried cyrus which didn’t work immediately and looked difficult to configure, then tried dovecot which did work immediately and I kept. The upgrade process seems not to have eaten anything. The desktop looked fine, although I didn’t have time to play with it much. I read that there are Nautilus improvements. Thus far, everything I try to do is working fine. No data was eaten that I can tell and my configurations survived admirably.
My main reason for wanting to upgrade quickly was that at this point I didn’t have a lot of work invested in the FC1 install. If something was going to go haywire and lose data in the upgrade process, better to make that attempt sooner rather than later. Now I’m on the 2.6 kernel and I may well stick here for a long while. I’ll upgrade packages as they need them, but unless there is some clear gain I may not immediately jump to FC3 whenever it comes out.