Managing release branches in Mercurial

Here's what I'd do:

Make default your "mainline" branch. The tip of this branch is the "currently released to the public" version of your code. Critical bugfixes can be committed directly to this branch and merged into development branches.

To start working on version 2.0, make a 2.0-dev branch. Commit changes for 2.0 to that branch, and merge critical bugfixes from the mainline (default) into it. Once you're done with 2.0, merge 2.0-dev into default and tag the result as 2.0.

Doing things this way means you don't have to worry about juggling branch names, and you can merge critical bugfixes to the mainline into development branches quite easily.

It also scales well when you're working on multiple future versions at once (say 2.1 and 3.0). You can periodically merge the 2.1 changes into 3.0 to keep 3.0 current.

You'll end up with a graph like this:

$ hg glog -l 1000
@       changeset:  25:efc0096f47c0  tip
|       summary:    Added tag 3.0 for changeset d1a7fc3d7d77
|
o       changeset:  24:d1a7fc3d7d77  3.0
|\      summary:    Merge in the redesign changes.
| |
| o     changeset:  23:b5b69d24c8f7 3.0-dev
| |     summary:    Finish 3.0 redesign.
| |
| o     changeset:  22:4c2f98fac54b 3.0-dev
|/|     summary:    Merge in the latest changes to 2.1/mainline.
| |
o |     changeset:  21:37df04521032
| |     summary:    Added tag 2.1 for changeset 39ecc520fc0a
| |
o |     changeset:  20:39ecc520fc0a  2.1
|\ \    summary:    2.1 development is done.
| | |
| o |   changeset:  19:208f3f9236af 2.1-dev
| | |   summary:    Finish the 2.1 work.
| | |
| | o   changeset:  18:4a024009a9d6 3.0-dev
| | |   summary:    More redesign work.
| | |
| | o   changeset:  17:00c416888c25 3.0-dev
| |/|   summary:    Merge in changes from the 2.1 branch to keep the redesign current.
| | |
| o |   changeset:  16:a57e781a0db1 2.1-dev
| | |   summary:    More 2.1 work.
| | |
| | o   changeset:  15:ddeb65402a61 3.0-dev
| | |   summary:    More redesign work.
| | |
+---o   changeset:  14:90f5d7a8af9a 3.0-dev
| | |   summary:    Merge in the fire fixes.
| | |
| o |   changeset:  13:78a949b67bb9 2.1-dev
|/| |   summary:    Merge in the fire fixes.
| | |
o | |   changeset:  12:6dfe9d856202
| | |   summary:    Oh no everything is on fire, fix it in the mainline.
| | |
| o |   changeset:  11:86767671dcdb 2.1-dev
| | |   summary:    Smaller changes for 2.1.
| | |
| | o   changeset:  10:25dec81d2546 3.0-dev
| | |   summary:    Work more on the redesign.
| | |
+---o   changeset:  9:42c7d689fb24 3.0-dev
| |     summary:    Start working on a complete redesign.
| |
| o     changeset:  8:3da99186ca7d 2.1-dev
|/      summary:    Start working on 2.1.
|
o       changeset:  7:9ba79361827d
|       summary:    Added tag 2.0 for changeset 755ed5c5e291
|
o       changeset:  6:755ed5c5e291  2.0
|\      summary:    Merge in the dev branch for 2.0.
| |
| o     changeset:  5:44a833fcc838 2.0-dev
| |     summary:    Finish work on 2.0.
| |
| o     changeset:  4:d7ba6aae1651 2.0-dev
|/|     summary:    Merge in the critical fix.
| |
o |     changeset:  3:968049f1b33a
| |     summary:    Fix a critical bug on the main branch.
| |
| o     changeset:  2:917869609b25 2.0-dev
| |     summary:    More work on the new version.
| |
| o     changeset:  1:f95798b9cb2e 2.0-dev
|/      summary:    Start working on version 2.0.
|
o       changeset:  0:8a3fb044d3f4
        summary:    Initial commit.

I think you should consider this: a successfull git branching model.

I am not the big fan of git, but this model is extra usefull for mercurial too.