We recently announced that we will have a Beta version of Silverlight 2.0 ready for Mix in Q1 of 2008, complete with managed code, many drag and drop controls and a host of other advanced features.
Let's be honest: just about any non-media-centric application you build in 1.0 you'll be able to build more quickly and more easily in 2.0 — so why not wait? I think there are good reasons; but let me say up front that reasonable people can disagree. The most limited and precious resource you have is your time, and so you have to decide where you want to invest it.
When we release the Beta of 2.0 we will be providing a lot of material to absorb. It is my hope and commitment to provide videos and documentation to ease the learning and assimilation of that material, but the reality is that coming up that learning curve will be non-trivial.
Silverlight 1.0 is a proper subset of 2.0.
Second, 1.0 is not a half-baked product; what it does, it does quite well, as you can see by taking a quick look at our showcase applications. You may find that even today, a bit of Silverlight can provide your users with a vastly enhanced web experience. (uh oh… drifting off into marketing speak <slap!>)
Third, we're listening. As you use 1.0 and even the 1.1 alpha you'll notice things you really want in 2.0; great – let us know. Features are definitely settling down, but they're not written in stone, and developers who are deep into coding with the existing product are going to have highly valued opinions that are going to be taken very seriously.
 1.1 alpha will be succeeded by 2.0 beta! We won't rename 1.1 alpha because the alpha won't be extant for very long, but forgive us the confusion of going from 1.0 RTM to 1.1 alpha to 2.0 Beta – it is a reflection of realizing how much 2.0 has grown since its original conception.