If you forget to set the TargetType in a ControlTemplate and access certain properties in the content presenter, Blend will report an error and you will not be able to edit the XAML in design mode.

Note that this error only effects design mode in blend, the XAML still compiles and works perfectly (assuming we apply the template to the correct type).

Example:

Ok on blend, ok on VS 2008 ->

Invalid XAML error on blend, ok on VS 2008 ->

For the error to appear you will also have to access non globally shared properties in the content presenter.

In the example below we try to set a content property which is not guaranteed to exist in the type we apply the template to.

Example:

 

Since I had to do this a couple of times on different machines I thought this might be useful for others.

Here is the list of steps I take to upgrade a Silverlight 2 beta 2 development machine to Silverlight 2 RC0.

First the pre requisites:

0.0 Because Blend version 2 can't live happily with older preview versions, you will need to uninstall Blend 2.5 June Preview or any other version of Blend 2 preview you may have on the machine.

0.1. You will need Visual Studio 2008 SP1 and .Net 3.5 SP1, so if you haven't done so before, install Visual Studio 2008 SP1(this will install .NET 3.5 SP1 as well).

Now the actual installation steps:

1. Install Microsoft Silverlight Tools for Visual Studio 2008 SP1(this will uninstall Silverlight 2 beta 2 SDK if need be...)

2. Install Blend 2 or Blend 2 trial version.

3. Install Blend 2 Service Pack 1 Preview.

You should be good to go.

Regarding breaking changes here are a couple we encountered:

1. The DataGridTextColumn property DisplayMemberBinding has been renamed to Binding.

2. TextAlignment was removed from button styles.
 

Good luck!