I had issues with the upgrade. It would always silently exit after entering the Reporting Services account information. The next page of the setup wizard is supposed to be SharePoint connection settings. When I upgraded, I did not replace the WSS 2.0 site but installed side-by-side and changed the SharePoint port settings in TFS config. I think this was the cause of the install failure.
I ended up building up a new virtual machine with the exact same specs, computer name, etc. I did not install TFS 2005, but restored the TFS 2005 databases and then ran the TFS 2008 installer. It detected and upgraded the 2005 databases and all is well.