I am currently (Feb 2010) moving lots of Azure samples originally built in Visual Studio 2008 to Visual Studio 2010 RC. I just realised there is a simple mistake folks can fall into. Easy to do, easy to avoid.
When opening an Azure solution originally built in Visual Studio 2008 you will see the Conversion Wizard.
Once you click Finish you will see this dialogue box with a default of Yes. Do not click Yes! Instead click No.
The reason is simple. As of Feb 2010 the Windows Azure Fabric in Microsoft Data Centres is not running the .NET 4.0 RC, it is instead running .NET 3.5 SP1. Therefore you want to stick with .NET 3.5 SP1 for your projects to get the equivalent experience with the development fabric – which means you won’t have access (just yet) to some of the really good stuff such as Entity Framework 4.
End result is a nicely converted solution.