I have been looking at the various install and upgrade stories for the TFS 2010 Beta. I have to say they are very nice compared to the older TFS versions. You now have a SharePoint like model where you install the product then use a separate configuration tool to upgrade or setup the features required. There are plenty of places to verify your setting as you go along to greatly reducing the potential mistakes.
One side effect of this model is that it is vital to get all your prerequisites in place. The lack of these has been the cause of the only upgrade scenario I have tried that has failed. This was on a VPC I used for TFS 2008 demos. This VPC used a differencing VHD using the older 2004 format that had a 16Gb limit and this disk was virtual full. To upgrade to TFS 2010 I needed to upgrade SQL to 2008 and this in turn needed Visual Studio 2008 patched to SP1 which needed over 6Gb free space, which was never going to happen on that VHD. So my upgrade failed, but that said this is not a realistic scenario, who has servers with just 16Gb these days!