VS 2010 Beta 2 - unable to update service reference

Question

I'm upgrading a project from VS2008 to VS2010B2 For some reason, after the project was upgraded, the code generated by the reference is missing, and I cannot re-create the code by reconfiguring the service reference, because I'm getting the following error:

The configuration for the service reference could not be updated due to the following issue: An error occurred creating the configuration section handler for system.serviceModel/behaviors: Extension element 'webHttp' cannot be added to this element. Verify that the extension is registered in the extension collection at system.serviceModel/extensions/behaviorExtensions.

The machine has the configuration for webHttp:

<system.serviceModel>
  <extensions>
   <behaviorExtensions>
    ...
    <add name="webHttp" type="System.ServiceModel.Configuration.WebHttpElement, System.ServiceModel.Web, Version=3.5.0.0, Culture=neutral, PublicKeyToken=31bf3856ad364e35"/>
    ...
                    </behaviorExtensions>
   ...