For the most part, you *should* have few, if any problems going from 1.0 to
1.1.  VS 2003 defaults to having apps run on the "most recent 1.x" assembly
(although you can override to force 1.0).  IIRC, 1.1 was mainly security
updates and some internal fixes, but the API is largely the same.  1.1 to
2.0 is vastly different, however, with entirely new patterns of doing
things.  2.0 is very "declarative" in nature, meaning 2.0 builds in a lot of
infrastructure that you may have had to roll yourself in previous versions
(sitemaps, DataSource controls, MasterPages, and asynchronous I/O come to
mind) but is exposed in a way that allows to to write a UI with little to no
code (ESPECIALLY if you use the SiteMap as your navigational plumbing
anywhere you can, as it gives you secure navigation with automatic access
filtering and some other "freebies").  Additionally, 2.0 adds a lot of
personalization features, as skinnable UIs (themes and the aforementioned
MasterPages), and greatly simplifies the web.config file.  Honestly, if you
have a choice, I'd recommend just going straight to 2.0, as it makes life
easier by an order of magnitude, especially in areas of architecture
(there's very little that hasn't already been architected by MS) and
maintenance (code is much, much cleaner if you even have any code left over
in your app)