Because of a number of architectural changes, the upgrade process from 1.x to 2.x does not follow the usual automated procedure. Integrating with the Hibernate persistence framework presented a number of opportunities to slim down the code base and the API, making it both more powerful and more streamlined. If we had attempted to create an automated upgrade process for 1.x installations we would have had to keep a large amount of code that was irrelevant for 2.x. Simplicity of design ruled the decision.
The basic process for migration is first to deploy the 2.x files; then to update the 1.x database, preserving your data; then to connect your 2.x installation to the database; and finally, to incorporate manually any 1.x customizations you've made into the 2.x installation.
In many cases upgrading to 2.x may not make sense. We have every intension to support 1.x as it's own code branch, and will continue to fix any bugs found in the future. (We do not expect to add any major new features to 1.x, however.) If you have made wide-ranging customizations to your store, or if your store would not be improved by the major new features of 2.x, you might save yourself a lot of hastle by not migrating.
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