Granted the In-place Upgrade process that Microsoft has released with 2010 is a HUGE improvement over what they provided us with for a 2003-2007 in-place, I still cannot say I head over heals for it...
Lets start by talking about what SharePoint 2010 In-place upgrade does very well… The obvious attraction to an in-place (assuming your hardware and software meets minimum requirements) is that it will upgrade your configdb, web.configs, contentdb, split up your ssp to corresponding service apps in one quick swoop. It will even upgrade some of those pesky FAB 40 and other solutions you deployed.
Sound too good to be true? It can be… Be wary! Things are not always as they may seem. Unfortunately there are some situations where you may have corruption in your Search DB or SSP DB that you are unaware of (and are not reported in the preupgradecheck report). This will allow the SSP to split into corresponding 2010 service application and not report errors, but not provision properly. A good sign that you have fallen victim is to try to start and stop the service app service. I found that I could not stop/start a some of my services from CA, and I could only accomplish the task via command line. To make things worse, deleting the service app and recreating leads to the same problem.
After struggling with this phenomenon I finally gave in and uninstalled 2007, uninstalled 2010, cleaned by the SQL instance, performed a clean install of 2010,launched the grey wizard (psconfig wizard), and launched the white wizard (2010 config wizard), created new web applications, and attached my content databases. This resolved my issues
In summary, though an in-place upgrade has its advantages when dealing with custom solutions. I am still a proponent of standing up a clean environment and utilizing the database attach method regardless.
