What are specific issues that standout as problem in trying to upgrade from FC1 to FC2?
There are potential issues with moving to the 2.6 kernel, but they're generally more of an issue for desktops (with things like graphics drivers and sound support changing) than they are for servers.
The biggest 'problem' people forsee is that a simple 'yum update' pointed at FC2 will probably not work 100% smooth from an FC1 system. You may need to boot from CD and perform an actual 'system upgrade'.
Later..I'd be interested to know the same. It also brings up another question: start with FC1 or FC2?
It depends on your timing. Right now FC2 is still in testing, so if you want a stable installation you should go with FC1.