The largest change in 2.0 is the move from having events live in regular posts to the (somewhat new) WordPress custom post types. This means that events are no longer going to appear in your posts but rather in their own panel called events. Part of the process of upgrading is to move your events (we have a magic button).
STEP -1: OOPS - I didn't want to update. No problem, you can easily revert. Grab a copy of the version of the events plugin you want here: http://wordpress.org/extend/plugins/the-events-calendar/download/ and add it to your plugins folder. Deactivate the new one and activate the old one your just upload. All better.
Ready to Go?
STEP 1: Before you do anything: BACK UP YOUR SITE. That way if you run into challenges you can revert if you have to. We use backup buddy and are extremely happy we do as we have had to restore numerous times over the years while playing with WordPress & Plugin updates.
STEP 2: Click update in the plugin admin or download and add it manually.
STEP 3: Migrate! In order to migrate your events after you activate the plugin, you will need to visit the setting panel and click the "Migrate Data!" button. We have some screenshots of the process on our FAQ.
STEP 4: Reset your permalinks (go to settings > permalinks > hit save). We've noticed that a lot of weird issues people have often get solved by this easy step.
STEP 5: Walk through the setting. The place the most people will run into challenges will be with Themes. We have a new theme integration approach that allow you to pick from any page template (screenshot) the theme offers or from the default event templates we bundle with the plugin. Try different options to see what looks best. If we get lucky, your theme will play nicely and one of these will work out of the box. If not, then you have a few options. There is a before / after html set of text areas to allow you to add any divs etc you might need. Often the issue is simply a little missing css on your main content div and can be added to your theme css file. This may take some noodling. We wish the you the best of luck. Feel free to ask the community for help on this step. People have been great. The plugin devs won't help on this step unless you have uncovered a legit bug with the plugin as supporting the 100k+ themes in the world is basically impossible and we all want them to stay focused on making awesome features.
STEP 6 (OPTIONAL): Dealing with custom templates. If you have been noodling in code, odds are extremely high you are going to have to make some fixes.
The path from open source 1.6.5 to 2.0 has been a long one with years of evolution. As you can imagine the template tags, queries & css have significantly changed over time. The odds of a highly customized theme upgrading cleanly is unlikely. While it may not be a ton of work, some is inevitable. We are actively working on documentation this week and will have it up soon at http://tri.be/support as it comes out. There are already quite a few items in the FAQ and you are welcome to search the PRO forums to find answers as it fills out.
Please let us know where you get stuck as you go through the migration process. While we won't help you code your site, we are on the active lookout for bugs. The more clarity we can get, the faster we can patch those suckers and get everyone an update.
Hope you all enjoy the significant effort we have put into the new version once you get through the migration and get up and running.
One quick note: PRO WON'T FIX YOUR SITE. If you are having any issues with the free version, adding PRO won't make any difference. All PRO offers are some additional features to help you accomplish more awesome things.