Visual Studio 2005 and .NET Framework 2.0 will be released in november 2005. Although I am still exploring (and sometimes struggling) with .NET 1.1. it is time to make up for .NET 2.0.
Some things will break, moving from 1.1 to 2.0. Microsoft released a 'List of Breaking Changed' here.
More compatibility issues can be found here.
For specific ASP.NET upgrade issues you can look at the upgrade center here.
And for conversion issues here.