With the release to web (RTW) of Silverlight 3, a lot of folks will [hopefully] be upgrading to take advantage of the new features now offered. The first question that will come up probably is, “how do I upgrade?” Upgrading should actually be a very easy experience. The Silverlight 3 Tools installer will do most of the work for you:
Note that it will not uninstall the Silverlight 2 SDK. It is perfectly fine to have these both installed together; you may even desire this if you wish to continue using the ASP.NET controls for hosting Silverlight in your web page (note: the ASP.NET controls probably will not work correctly if you’re taking advantage of the new browser navigation features).
You will need to update your installed version of the Silverlight 3 Toolkit Controls manually. Since this is not part of the basic set of tools for Silverlight development in VS, we don’t manage the upgrade for it.
Hope this clears up any confusion!