All Silverlight 1.0 projects should work fine, but there may be some Silverlight 2 Beta projects that require updates.
For the media folks, there's a couple of new things I want to mention.
- There's a new scaling algorithm that's a lot faster and much higher quality - a nice compromise when you can get it!
- Additional optimizations have been done for the VC-1 video decoder, so playback will be faster. The gains are biggest for content using B-frames.
Since the default Expression Encoder templates have "always on" scaling and its presets use B-frames by default, the above will provide a nice performance boost for existing content. The above are "always on" features - you don't need to update anything to take advantage of them. So expect smoother frame rates on lower-end machines.
EDIT: Added ScottGu link
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