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I didn't find out about this until I already upgraded VS2010, but according to Visual Studio Magazine :

In VS2010 Beta 2, many developers reported issues when working with XAML and Windows Presentation Foundation and Silverlight. The VS2010 RC supports Silverlight 3.0 apps. Silverlight 4.0, still in beta, is not supported in this release.

"We will be adding VS 2010 RC support for SL4 with the next public Silverlight 4 drop," explained Guthrie. "If you are doing active Silverlight 4 development today we recommend staying with the VS10 Beta 2 build for now."

Being a developer, the paranoia set in....

Anyone know of any red flags or known issues to watch for?

+1  A: 

Some of our developers have reported a high incidence of crashes working with Silverlight 4 in VS 2010 beta2.

One thing that helped was to view XAML in XAML mode not Design mode.

We also have seen issues using Blend in conjunction with VS 2010 beta2 as it can't handle solution folders.

Rus
A: 

FYI, the app crashes at least twice a day for me. Not all occurrences have been consistent. Those that were have been reported or previously identified. The main two that tends to crash it is switching between the XAML/Design view or attempting to deal with/switch back and forth between two instances of VS2010 open on the desktop at once.

Suggestion: Save and save often.

jasonk