I had a similar experience, and the only thing that we had to replace was a third-party control that we were using in the 1.1 app, and the vendor had gone out of business an never released a version that worked with .NET 2.0. We ended up replacing it fairly easily with an AJAX Control Toolkit control.
Other than that, the compiler does a pretty good job of telling you what to do with respect to deprecated method calls.
I'd suggest making a copy of the code and upgrading the site in Visual Studio and see what happens. Just open the solution in Visual Studio 2005 or 2008, the IDE will walk you through the upgrade automatically. Get it to compile, then if you have any documented tests you should run through them. If not, you'll want to plan testing to make sure all your functionality still works like it did before the upgrade.
Migrating to Silverlight sounds like fun, but if you can get it upgraded and working, I'd probably push that off until a later release -- my experience tells me that you might get into trouble if you bite off too much at once if there is no show-stopping technical reason.