—– Original Answer —–
vmware server 2.0 is drastically different from 1.x. The administration interface is all web-based.
I have not heard of anyone who liked using it and didn’t think it was awful.
I would setup a seperate server with 2.0, play with it, see if you like it and then copy your machine(s) to it to use.
If you HAVE to do an inplace upgrade backup your entire system and your VMs.
If you don’t HAVE to upgrade I would avoid it like the plague, but I may be biased and it might have improved since I last used it.
VMware Server 2 is a solid product. It is worth the upgrade. VMware Server 2 has an optional ability to be managed by Virtual Center if you have an existing VI 3 environment. It also has it’s own management interface (just like GSX did).
To upgrade, I would follow VMware’s direction on upgrading and I would definetly back up all of your VM’s prior to an in place upgrade. If nothing else, get an external hard drive and copy all the VM and VM files off to it. I would avoid an in place upgrade if at all possible though for the sake of having a cleaner system and faster recovery in the event of a failure.