User has developed projects in BizTalk 2006 R2 - VS 2005.
He is trying to upgrade those projects to BizTalk 2009 - VS 2008.
When he opens the project in VS 2008, upgrade fails - no errors are displayed.

User has renamed the default configuration names in VS 2005 BizTalk projects.
Development - Debug
Deployment – Release

We added the default configuration names to VS 2005 projects.
(We have to manually edit btpproj files to make those entries.)
Now the upgrade process was successful.

Here are the detailed steps.

1. For solution file
under  GlobalSection(SolutionConfigurationPlatforms) = preSolution section I did not see entry for default Development configuration.
Added following entry there
  Development|.NET = Development|.NET
Here we need default entries for deployment and development.

2. For solution file
under GlobalSection(ProjectConfigurationPlatforms) = postSolution I did not see entry for default Development configuration.
Added following entries there
  {Some_GUID}.Development|.NET.ActiveCfg = Development|.NET
  {Some_GUID}.Development|.NET.Build.0 = Development|.NET
Here we need default entries for deployment and development.

The GUIDs displayed here are project specific. That means, if you have multiple BizTalk projects in the solution, you have to make sure the default entries are present for each one of those.

3. For project file under <Build> section did not see <Config> section for default Development configuration
Added following entry there
  <Config
                    Name = "Development"
                    ApplicationName = ""
                    BpelCompliance = "True"
                    GenerateDebuggingInformation = "True"
                    EmbedTrackingInformation = "True"
                    TreatWarningsAsErrors = "False"
                    WarningLevel = "4"
                    OutputPath = "bin\Development\"
                />
Here we need default entries for deployment and development.

4. Delete user options file (as it is not really needed)

5. Opened the project on BizTalk 2009 VS 2008 box. Upgrade process is successful.