Well My experience of Version 1 was interesting. I wanted to use POCOs but it didn't support it. After reading around I came across some code from a bod at microsoft that did this.
It was a bit messy to generate the code but on the whole this part of the process was not so bad.
A real nasty part that I came across was the lack of Concurrency checking built in, for N-tier development. You have to manage this yourself which after looking at the problem was not so bad, especially if you want to hand back the versioning back to the client for user intervention.
Second nasty and absolutely stupid thing missing was the IN keyword for LINQ queries. Not supported and so needs to be worked around. I found a solution but was a real mess bringing in some other code that quickly patched up the omissions.
Would I use EF 4.0 (2.0). Yes, absolutely, why not? In fact on stage 2 I will be using this. It looks like it supports POCOs, it looks like my concurrency model will move straight across with no problems (basically delta copy stuff). Its all good so far and I hope this time round that the Big guys at Microsoft have seen the errors of their ways and provided a solution that works.
If your buying into entity development and the whole Concept Model first thing, then its the only way to go for a complete Microsoft solution. Although the stuff being done on the M language might eclipse the idea and move the whole modelling thing back to the Database.
If you not buying into the Entity stuff then I would strongly go Enterprise Library. Its a proven technology that works every time built on a solid code foundation and Database centric paradigm. I would also go this route if you think that Stored Procedures are the bees knees and like what they bring to the table.
If your feeling really exotic and feel a bit frisky I would go with a NO-SQL approach such as CouchDB. This however does take some getting used to. Its damn weird and feels really really wrong. But things get developed in super quick time and the solutions seem to be robust and faster than expected. I would not got for this type of solution though if your big into Normalization and think that it can be applied to a NO-SQL approach. The whole model needs to be shifted on its head and the application will be needed to be modelled in a way that is driven by the technology applied.
I find the CouchDB way a bit dirty and very very wrong. But it has so many compelling reasons to use it, that I think it will seep into the psyche of every programmer, and it will definitely go mainstream in the next couple of years.
My biggest gripe still with the whole Entity thing though even in the new version 4 is that there really has not been much thought into N-tier environments. It still got a feel about it being a 2 tier solution with a lot of boiler plate code still needed to be done by the end user (developer), to get it working in a robust and dependable N-Tier way.