Windows Server 2008 Upgrade to R2 with Hyper V
I'm upgrading my Hyper-V/2008 machine tonight. Only 2 issues that I've had is that I needed to move the page file off of the system drive to allow for enough free space, and I decided to discard my snapshots from my VMs before doing the upgrade.
These KB articles were helpful for me...
- http://support.microsoft.com/kb/957256
- http://support.microsoft.com/kb/972502
What kind of services do you use this Win2008 server for? Is it just a virtualization platform? If so, then I would suggest not upgrading but rather deploy R2 on new hardware, test it in a lab and make sure it works as you expect, then migrate the virtual machines from the old box to the new box in a properly staged go-live strategy.
In general, I try and avoid in place OS upgrades for anything other than test machines. It's always better to start from scratch.