I was just chatting with Dave Glover and he mentioned he had just finished upgrading our Team TFS Server to SP1.  Unfortunatley his first attempt failed the error: "28002 Error Unknown" -of course naughty ole Dave hadn't read my post about Backing up the server before applying SP1!  Luckily he found the answer to the problem pretty quickly:

The work around is to remove one of your users from the "Team Foundation Licensed Users" Membership Group.

For more information see Daves post:

Upgrading to Team Foundation Server SP1 – Workgroup Version and a Gotcha!!

 

Thanks Dave!