Will TFS 2010 Beta 1 be upgraded to the final product?
TFS 2010 Beta 1 is an early beta release intended for offline use when testing a product. You must not use it to run a production project and upgrade from Beta 1 to a later Beta release, or Microsoft's final release is not supported.
This is the same as with the early beta of TFS 2005 and TFS 2008. When Microsoft offers a beta version of TFS with a "go-live" license, it is usually a signal that the upgrade path will go from beta to product release.
In terms of the installation experience, having been playing around with TFS 2010 for a while now, it's clear that Microsoft has put a significant amount of effort into the installation, and it's much smoother and more flexible than in previous releases. However, you still need to make sure you have the necessary prerequisites (for example, IIS and SQL Server 2008). As always with TFS, be sure to follow the installation instructions.
Personally, I would recommend testing the TFS 2010 Beta 1 beta in a virtual machine. You will probably also want to install the Visual Studio Team Suite client on virtual machines, unless you are ready to rebuild the machine that has Beta 1 installed.
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http://blogs.msdn.com/bharry/archive/2009/05/18/vs-vsts-2010-and-net-4-0-beta-1-is-available.aspx
If going from Beta 1 to Beta 2 is difficult, then going from Beta 1 to Release is likely to have problems as well.
I'm sure it will have the best support that CTP does, but MS Betas often has "Upgrade Blues".
I would recommend installing on a temporary virtual machine for now.
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