Just finished upgrading our development & testing server to BizTalk 2006. There were no problems. Just be sure to backup master database and all the BizTalk databases, otherwise you might lose everything if something goes wrong.
Before upgrading, make sure you install:
1. Internet Information Services 6.0
2. Microsoft SQL Server 2005 or Microsoft SQL Server 2000 Enterprise Edition with Service Pack 4
3. SQLXML 3.0 with Service Pack3
4. SQL Notification Services with Service Pack1
5. Windows SharePoint Services2.0 with Service Pack 2
6. Microsoft .NET Framework2.0
7. Microsoft Visual Studio®2005
8. Microsoft Data Access Components (MDAC)2.8 Service Pack1 (SP1) (not required Win2003)
9. Microsoft XML Core Services (MSXML)3.0 Service Pack7 (SP7)
10. Microsoft XML Core Services (MSXML)6.0
11. Office Web Components 11 (OWC11) with Service Pack1 (required for HAT)
12. ADOMD.NET 8.0
13. ADOMD.NET 2005 (9.0)
Optional (if you want BAM and BAS):
1. InfoPath 2003 with Service Pack 2
2. Excel 2003 with Service Pack 2
1. Stop all BizTalk hosts
2. Stop Rule Update Engine service
3. Stop World Wide Web Publishing service
4. Start Enterprise Single Sign-On service, if not started.
5. BACKUP YOUR DATABASES
6. Start installation & follow instructions.
Restart is not required after upgrade.
Remarks: I didn't test assemlies written for .NET 1.1, but I think it should work just fine. Also I'm not sure how will this upgrade behave in a clustered enviroment, so be sure to read all the necessary documentation before taking any actions.
Refer to this document for further reading:
Installing and Configuring Microsoft BizTalk Server 2006 Beta 2 on Windows Server 2003